Impact of Socio-Cultural, Technological, Political and Ecological Factors on McDonald's International Business

This study discusses the impact of socio-cultural, technological, political and ecological factors on McDonald's international business. It covers topics such as changing customer demands, technological advancements, governmental regulations, and economic conditions affecting the fast food chain.

International Business
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TABLE OF CONTENT
INTRODUCTION............................................................................................................................3
MAIN BODY...................................................................................................................................3
Ways in which socio-cultural factors affect McDonald restaurant in international business......3
Technological developments that affect overall performance of McDonald restaurant..............4
Political environmental factors that can affect business decision and performance of
McDonald's...................................................................................................................................5
Ecological considerations, taken by McDonald restaurant that affect their international
business decision..........................................................................................................................6
CONCLUSION................................................................................................................................7
REFERENCES.................................................................................................................................8
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INTRODUCTION
International business refers to the trade of goods, technology, services and knowledge
across national borders (Szkudlarek, Osland, Nardon and Zander, 2020.). This study is based on
McDonald's, an American multinational fast food corporation. This study is going to discuss
ways in which socio-cultural and technological factors have affected McDonald's in both positive
and negative manner. It will further discuss some political and economic factors such as:
differences in income, cash inflow and others that can affect overall impact on productivity, sales
and performance. Lastly, it will discuss impact of advanced technology on organizational growth
and development.
MAIN BODY
Ways in which socio-cultural factors affect McDonald restaurant in international business
Socio cultural factors play a vital role and companies need to consider this factor while
introducing new product and expanding business. Nowadays, customers’ demands have been
changed to the great extent. In regard to fast food and hospitality sector, it can be said that fast
food chain including McDonald are striving hard because of changing needs of customers.
Customers have become health conscious so they prefer healthy as well as tasty food. Some
current socio cultural trends that can affect overall performance of this fast food chain in a
critical manner include:
Changing family as increase in one-person household create different needs. Developed
countries are adopting youth oriented culture (MacDonald and Diallo, 2019.). As per this culture,
children and young people decide the place of having meal and it can be beneficial for
McDonald. McDonald offer fast food and it is being liked by young people and children. An
ability of McDonald to focus on children and teenagers as advertising target can make it
beneficial in increasing sales as well as profit margin.
Another socio-cultural factors are: bringing food from outside due to busy schedule and
time-consuming process of preparing food. There is no doubt as McDonald has affordable prices
for its food items. Anyone can afford it. Nowadays, women are working, and they do not find
enough time to prepare food and due to busy schedule and time shortage, they prefer to order
food and McDonald's is easier accessible and provide online delivery. So, this trend can also have
positive impact on overall performance of company as it can increase sales and profit margin as
well. There are number of people who live far away from their family and due to busy schedule,
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they do not prefer preparing food on daily basis, so they also prefer ordering food. So, this
changing trend and time shortage also have positive impact on McDonald's.
Other than this, cultural factor also affect performance of this fast food chain. It includes
tradition, religion, art, education and language. McDonald's used to serve only beef burger but
when it entered in India then it identified requirements of Indian and came to know that there are
number of Hindus people live, and they do not each beef. So, as per the cultural values and
beliefs, it served fish, vegetable and chicken burgers and it was its first new McDonald's without
beef (Davies and et.al., 2020). So, on the basis of this, it can be said that cultural values as well as
beliefs affect organizational performance, sales and productivity to the great extent. It all depends
on the capability of companies of adapting changes and understanding cultural values.
McDonald's understood values and beliefs of different cultures and that is why it has an effective
position in the market. Initially, it faced some problems but its skilled workforce, capabilities and
leadership made it able in making an effective position.
Technological developments that affect overall performance of McDonald restaurant
It is known to all that technology has changed the world to the great extent. It has made
communication more accessible. It has changed lifestyle of people and this changed lifestyle has
caused changes in products demand. For example, people have become social active, and they
prefer to upload photos on social media whether they go for eating in restaurants, whether they
go for roaming and others. These changes have affected McDonald's. McDonald provide fast
food at affordable prices but it does not have attractive infrastructure and it may affect its sales
and performance.
Other technological factor and trend that may also affect its performance is: promotion.
Companies are striving hard for being in the competition, and they are using effective
promotional channels so that they can reach to global customers. Technology has made this
company able in promoting its products and services via using number of channels. It reached to
global customers and by providing online delivery, it has increased sales and profit margin (Tien
and et.al., 2020). In addition, it is known that systematic substitution of equipment for people and
positioning of technology has helped each franchise to be of the same high standard. Customers
are more likely to order from McDonald's and it has happened all because of technology. It has
decreased waiting time of customers as customers do not need to wait its stores. It has increased
order accuracy and lower staff cost.
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But on the other hand, it can also be said that technological advancement is increasing
competition for this fast food retail chain as there are number of other restaurants and fast food
chain that also provide online delivery. It can create barriers in becoming successful and can
decrease its market share. Increasing competition is one of the big threat for companies as
customers can switch brand in an easier manner when they have a lot of options. So, on the basis
of this, it can be suggested to this fast food chain that it should focus on selecting effective
promotional channels and need to approach global customers.
In addition, it can also be suggested that by encouraging customers for installing its official
application and using its official website, it can make its position in the market. By providing
rewards, vouchers and discounts on first and second online services, it can increase customers’
retention rate as well as can take competitive advantages (Hwang, Cho and Kim, 2019). Overall,
it can be said that technological factor is having critical impact on its performance. It needs to
invest more in research and development programs so that it can beat competition and can
become the market leader.
Political environmental factors that can affect business decision and performance of McDonald's
Political factors include laws, groups and agencies and these forces are highly important.
Political background across different regions of the world. In addition, it can be said that
governmental regulations as well as restrictions regulate the content of promotion. Law restricts
advisor’s freedom and concern the advertising messages. It can affect overall performance of
companies. For example: in China as well as in France, door to door selling cannot be used as it
is prohibited completely (Huang, McDonald and Seto, 2018). For cafe and restaurants, it is
important to abide all rules of health and safety and make sure that they provide qualitative food
to customers. In regard to McDonald’s, it can be said that if this fast food chain does not abide all
rules of food quality and health and safety then it may have to face lawsuit and other legal
problems. It can damage its brand and may affect sales.
In addition, it is also known that its fast food products contain high sodium and sugar that
may lead health concern. For this reason and making people sure that it takes care of people, it
has added new healthy items in its food. It is one of the best effective strategies that may help out
this fast food chain in improving overall performance. On the basis of this, it can be said that this
fast food chain responds to all changing factors in an effective manner and it is the reason as it is
the market leader and has; potential customers’ base. Due to some political issue, some countries
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have banned this brand in their country. For example: Iran, it has some animosity with America
and it is the reason, it has banned McDonald’s in its country. As like this, Bermuda has also
banned this brand against of fast food. So, on the basis of this, it can clearly be said that political
stability and instability of countries affect overall performance of companies to the great extent.
Along with these, there are some other political factors that are affecting this company in a
positive manner. Increasing international trade agreement is an opportunity for McDonald’s. By
increasing trade and expanding business in other countries, it can increase market share, sales and
profit margin as well (Lee and et.al., 2020). It abides all rules and responsibilities of health and
safety and other, associated with different countries and it is beneficial for this company.
Customers trust on this and they are more likely to stay with business for the long run.
Ecological considerations, taken by McDonald restaurant that affect their international business
decision
Economic is one of the main factors that affect profit margin as it affects consumers’
spending power and consumer’s disposable income. Economic condition of countries affects
pricing strategies of companies. For example: if economic condition of countries is poor and
people have low disposable income then businesses will have to lower their prices so that they
can attract customers’, otherwise, people will not buy products. As like this, if economic
condition of countries is strong and people have high disposable income then they are more likely
to spend in food and other services. So, in this situation, companies can charge high and can
make high profit (Applebaum and et.al., 2020). So, on the basis of this, it can be said that profit
and sales rely on economic condition of countries. McDonald’s operate in number of both
developing and developed countries. Its prices are low for some of its fast food and it is one of
the main effectiveness that can make this company able in increasing staff retention rate.
In addition, it is known that McDonald’s presence in all over the area create around 3,490
jobs and around $61.4 million in spending. On an individual restaurant basis, this fast food chain
employ 55-60 employees and it requires around $615,660 spending on wages. So, on the basis of
this, it can be said that this fast food chain plays a vital role in improving economic condition of
countries wherever it operates. Along with this, it supports local programs and charitable causes
that also helps this company out in improving overall economic condition of countries. China’s
slow economic growth affected sales, profit margin and performance of this fast food chain. It is
striving hard for being in the competition after Covid-19. It is investing heavily in launching new
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healthy products and it might have positive impact and by doing so, it can regain its image in the
market and can attract global customers as well (Romulo and et.al., 2018).
On the basis of above discussed external environmental factors, it can be said that all these
factors affect companies in both positive and negative manner. Companies can grow and operate
their business without getting affected only when it has flexible workers and an ability to operate
business in unique ways. McDonald’s is known for its uniqueness and creativity and it is the
reason, it is the market leader. It needs to focus on investing in research and development as well
as improving relations with suppliers for increasing profit and providing qualitative food to
customers.
CONCLUSION
It has been summarized from the above study that business environmental factors have
critical impact on overall organizational performance. This study has shown impacts of socio-
cultural factors in ways of performing functions of fast food chain. Further, it has discussed
impact of advanced technology in productivity, sales and performance of fast food chain.
Economic condition of countries also plays a vital role as it enables businesses in performing
their functions with effectiveness and taking competitive advantages. This study has shown some
political factors and their impact on trade of businesses such as: tax rate, trading restrictions and
other regulatory legislations.
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REFERENCES
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Davies, I. and et.al., 2020. Seeking sustainable futures in marketing and consumer research.
European Journal of Marketing.
Huang, C.W., McDonald, R.I. and Seto, K.C., 2018. The importance of land governance for
biodiversity conservation in an era of global urban expansion. Landscape and Urban
Planning. 173. pp.44-50.
Hwang, J., Cho, S.B. and Kim, W., 2019. Consequences of psychological benefits of using eco-
friendly services in the context of drone food delivery services. Journal of Travel &
Tourism Marketing. 36(7). pp.835-846.
Lee, V.J. and et.al., 2020. Preparedness for emerging epidemic threats: a Lancet Infectious
Diseases Commission. The Lancet Infectious Diseases. 20(1). pp.17-19.
MacDonald, M.E. and Diallo, G.S., 2019. Socio-cultural contextual factors that contribute to the
uptake of a mobile health intervention to enhance maternal health care in rural Senegal.
Reproductive Health. 16(1). pp.1-12.
Romulo, C.L. and et.al., 2018. Global state and potential scope of investments in watershed
services for large cities. Nature communications. 9(1). pp.1-10.
Szkudlarek, B., Osland, J.S., Nardon, L. and Zander, L., 2020. Communication and culture in
international business–Moving the field forward. Journal of World Business. 55(6).
p.101126.
Tien, N.H. and et.al., 2020. Analysis of McDonalds’ entry strategy into Vietnam market.
International Journal of Advanced Research and Development. 5(3). pp.23-29.
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