External Environmental Analysis of McDonald in Singapore

RUNNING HEAD: Introduction of management 0
Mcdonald
Introduction of Management

Introduction of Management 1
Contents
Description of company.............................................................................................................2
Pestle Analysis...........................................................................................................................2
Porter’s five force analysis.........................................................................................................4
Management recommendations.................................................................................................5
Conclusion..................................................................................................................................6
References..................................................................................................................................8

Introduction of Management 2
The purpose of this report is to do external environmental analysis of McDonald based on
Singapore. The external environment includes the Pestle and porter’s 5 force analysis.
McDonald is an American fast food company. It was established in 1940. It has become the
largest quick service restaurant.
Description of company
McDonald is fast food and service restaurant. the company is listed in NYSE. The head office
of company is in Chicago. McDonald was established in Singapore in 1979. The restaurant
has more than 35000 restaurants in over 100 countries. The food chain engages more than 4
million people. It serves 70 million customers (Market Realist, 2014). The competitors of
McDonald are Burger King and YUM. The company offers fries, burgers, sandwiches,
salads, wraps, nuggets and many more. The company offers training program to employees to
achieve highest performance level and customer service. The mission of company is to be
customer’s favourite place to eat and drink (Grigore, 2014). The vision of company reflects
the strategies of company. 70% of McDonald’s restaurants are franchisee. The company
earns significant revenue from it’s franchisees. It also provides good employment rate in the
country. The types of it’s restaurants are McCafe and McDrive. McDrive is usually located
near highways and there is no counter service or seating. A few locations also offer ‘walk
Thru’ in spite of Drive Thru. The McCafé is accompanied by McDonald restaurants. This
concept was originated by McDonald Australia. The up gradation of restaurants to McCafe
has increased sales by 60%.
Pestle Analysis
The Pestle analysis examines the external environment which the company faces in six areas
political, economic, sociological, technological, environmental and legal factors.
Political: The political factors consist of government policies, rules and regulations of
Singapore. The political factors could affect the business of McDonald in the country. The
laws related to tax, health, food safety and workers affects to the internal working. Singapore
is both bureaucratic and democratic nation. The political system is affected by the decisions
made by Singapore government. These decisions are made to address public. There is
political and government stability in the country which leads to tremendous amount of profits
to the food industry. The country has highest rank in the political stability index. It measures
the absence of terrorism. Since the food served by McDonald has health consequences so it is

Introduction of Management 3
adhered to the guidelines which are doing well in the country. The political condition in
Singapore is not difficult so it provides confidence to McDonald to conduct business. The
company is doing well in Singapore by following rules and regulations of country.
Economic: The economy of Singapore is fascinated by the various industries of the world.
The country has the most open economy. The economy of country is highly stable in the
terms of macroeconomic. The revenue of government is high and there is no foreign debt on
the country. The economy was strong even during the financial crisis. The country has most
stable economy. The GDP growth rate of Singapore is 2% (Lewin, et. al. 2016). The country
depends on the food industry for the economic growth. High capital investment is needed to
expand business in Singapore and McDonald is capable of investing in such economy. The
company can open individual restaurants and it’s outlet in shopping malls. The company need
to proper plan before investing in the economy. Singapore is small from the perspective of
area and has fewer natural resources. The Singapore economy is greatly favourable for food
industry. McDonald has become successful by catering small areas of country. The industries
which made up the Singapore economy are:
 Tourism industry
 Finance service industry
 Export of electronic items and machinery
 Largest cargo seaport worldwide
Social: The quality life in Singapore is high which helped company to establish business in
the country. The country has people from different culture and social background. Singapore
attracted 17.4 million international tourists in 2017. It is expected that the number of tourists
is going to increase in the coming years. The increasing number of tourists led to expansion
of food industry. It is the opportunity for the restaurant to grow it’s business as large
manpower is required to for the growth of industry. The country is tourism based and fast
food is consumed by tourists in the large quantity. People are familiar to food of McDonald
so there is huge fondness of food (Rosemann & Vom Brocke, 2015).
The culture of Singapore is covetous so there is pressure on population of country. The life of
people is maintained by 5C: Cash, Credit card, Car, Condo and country Club. The country is
known as the happiest country in Asia. The tourists mainly come from China, Malaysia and
India. McDonald is already well-known in these countries so it does not have to face much
difficulty in sales as the social preferences are already known to the company.