Micro and Macro Environmental Factors - McDonald's

Business and Business
Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 & P2: Covered in PPT............................................................................................................1
TASK 2............................................................................................................................................1
P3: Interrelation between different organisational departments and their linage with
organisational objectives.............................................................................................................1
TASK 3............................................................................................................................................3
P4: Impact of micro-environmental factors................................................................................3
TASK 4............................................................................................................................................5
P5: Internal analysis of organisation for identification of strength and weaknesses..................5
TASK 5............................................................................................................................................5
P6: Interrelation of macro-environmental factors with organisational strength and weaknesses
.....................................................................................................................................................5
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................8

INTRODUCTION
Business organisation is operated its business functions under business environment
which are more complex and contingent in nature. It consists of internal and external factors
which affects and influences the business operations of an organisation either in negative or
positive manner. Internal factors comprises of employee morale, shareholders, suppliers and
community as a whole whereas external factors comprises of political, social, technological,
economical etc. For this, an organisation must have an skilled management to analyse such
factors more carefully and plan accordingly. McDonald's is a fast food restaurant which provides
hamburgers, French fries, cheese burgers, soft drinks and many other food items and become one
of the largest chains of fast food restaurants in all over the world is selected for the purpose of
preparing this project report. Different types of organisations in addition with their size, scope
and purposes are briefly discussed under this report. Along with this, interrelation between
different organisational departments and their linkage with company's goals and objectives are
also properly explained under this report, Apart from this, analysis of external environment
through PESTLE along with their positive and negative impact, SWOT analysis etc. are also
covered under this report (Avramenko, 2012).
TASK 1
P1 & P2: Covered in PPT
TASK 2
P3: Interrelation between different organisational departments and their linage with
organisational objectives
Illustration 1: Organisational Chart of Company
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Source: Organisational Chart of Company. 2013
Organisational objectives can be achieved with the help of getting adequate support from
the various departments which are working altogether for betterment of an organisation. Such
departments includes production, marketing, finance, Research & Development department etc.
Along with this, support from top authority such as shareholders, CEO and Board of Directors
are also required in form of making an effective policies and plans so as to provide right
direction to all departments (Bovee, Thill and Raina, 2016). The organisations operated at global
level such as McDonald's is required to needed to understand the importance of contribution
made by their various departments. It can be briefly described as below:
HR department: Such department is helping company in attaining skilled and
knowledgeable employees who are much capable to contribute maximum efforts in achieving
their desired goals and objectives within pre-determined time period. It requires support from
marketing department to adopt marketing tools and techniques so as to attract and invite
qualified candidates to apply for the vacant job. Contribution of such two departments are also
help in achieving company's goals and objectives. For example, Fulfilling human resource of
company with skilled and knowledgeable employees receives maximum contribution and efforts
to achieve organisational objectives.
Finance department: Such department is helping company to acquire assets and allow
them to adopt an effective technologies which can be further used in execution of different
business functions. It is held liable to raise funds from different sources such as financial
institutions, banks etc. which can be further distributed to all departments. Therefore, all other
departments are very much depend on finance department due to requirements of financial
resources. For example, production department required financial support to acquire advanced
technologies for production process which can be available through finance department
(Commander and Svejnar, 2011). Therefore, fulfilling the needs and demands of targeted people
help company in achieving huge customer strength which makes strong their sustainability in
competitive market. Thus, it directly supports company in achieving huge profitability which is
one of the prime objective of McDonald's.
Marketing department: Such department is helping country to make strong their brand
image in competitive market world though adopting marketing tools and techniques such as TV
Advertisement, newspapers etc. Implementation of such tool requires huge amount of funds
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which can be available through finance department. Therefore, having sufficient amount of funds
enable company to adopt advanced technologies and methods in their business operations so that
quality products can be produced to customers which directly enhances their quality of life. It
enhances the satisfaction level of customers which is the another objective of McDonald.
Research & Development Department (R&D): R&D is helping company to identify the
needs and preferences of targeted people through conducting market research. It assist company
to make changes in their existing policies and plans after considering the satisfaction level of
targeted people. It further support to marketing department in implementing marketing tools after
acquiring sufficient knowledge about market needs and requirements. This will help company in
meeting the market needs with the help of production department. It increases sustainability of
company which is clearly mentioned under memorandum of association of company.
Production department: Such department play a major role in fulfilling the needs and
demands of targeted people through producing quality products in quantity demanded. During
production process, the information about the taste and preferences of customers are essentially
required to have which can be possible through receiving market information from R&D
department (Hamilton and Webster, 2015). It assist company to achieve huge customer strength
due to which McDonald's can successfully achieve its objective i.e. capturing large market share.
Therefore, it can be clearly seen that all departments are much interrelated with each
other and provides combined support in aching desired goals and objectives within pre-
determined time period.
TASK 3
P4: Impact of micro-environmental factors
There are several factors included in macro-environmental factors such as political,
economical, social, technological etc. which can affects business operations and existence of
organisation either in negative or positive manner. It is majorly affected organisations which are
operated at global level such as McDonald's. Therefore, it requires to analyse such factors
identifying negative as well as positive impacts of each factor which can be possible through
conducting PESTLE analysis. It can be further understood under the following:
Political factors: Such factors are related with the fluctuations in political system which
can affects McDonald's due to having operations in more than 100 countries. Due to this, it is
required for company to comply with government regulations pertaining to health and hygiene.
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 Positive impact: Favourable government import-export policies supports company to
expand its business through opening new outlets (Karagiorgos, Drogalas and Giovanis,
2011).
 Negative impact: The government may pressuring the fast food industry whose junk
foods causes obesity, cardiovascular and high cholesterol. It affects their existence in
market in adverse manner.
Economical factors: Such factors is related with economic stability of country which can
influences the buying behaviour of people. It includes taxation factor which can affect the
pricing policies of McDonald's. Positive: Favourable taxation policies enable company to maintain its current pricing
policies which makes easy to retain loyal customers with company (Shigang, 2010).
 Negative: Operating business in country such as Pakistan whose economy are decreases
on continuous basis bring negative result to company.
Social factors: Such factors is related with thoughts and buying behaviour of people on
which the sales and profitability of company depend. Positive: Children and teenagers are the targeted people of McDonald's therefore their
favourable buying behaviour increases sales and profitability of company.
 Negative: In most of the countries, people are much conscious about their health due to
which they consume less junk food in order to prevent any diseases. This will affect the
sales of company (Kolk, 2016).
Technological factors: Such factors is related with technological advancement which
makes easy for company to operate its business functions more smoothly. Positive: Using advanced techniques and tools such as mobile technology which can help
organisations such as McDonald's to reach its products to maximum number of people.
 Negative: Requires huge amount of investment which can affect their profitability.
Legal factors: Such factors are related with legal laws and legislation made by
government with the purpose of following by organisations operated in their country. Positive: Implementing health and safety laws by McDonald's encourages customers to
buy their products (What SWOT Analysis is in simple words, 2016).
 Negative: Non-compliance of government laws will cause huge penalty and fines on
company which can affect their profitability and brand market image.
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Environmental factors: Such factors are related with environmental laws made by government
which explains the importance of protecting environment. Positive: Providing paper based packaging rather of using polystyrene by McDonald's
can protect the environment.
 Negative: McDonald's has faces environment issues due to using polystyrene packaging
fort its sandwich that can affect their brand image in market (Osterwalder and Pigneur,
2010)..
TASK 4
P5: Internal analysis of organisation for identification of strength and weaknesses
Internal analysis in important for an organisation to identify the inner-effectiveness and
deficiency which can affect their whole business operations. For this, the management of
McDonald's is required to conduct SWOT analysis in order to analyse internal factors which are
given as under:
Strengths Weaknesses
 More impressive core competencies in
franchising and logistics.
 Children and teenagers are the targeted
people which covers maximum
population in country.
 Difficult to achieve growth due to
having business large in size.
 Low differentiations with other similar
fast food products such as Burger King,
 Higher employee turnover at the local
level.
Opportunities Threats
 Adding healthier food options due to
making efforts which can changes the
perception of customers.
 Require to enter into new product
categories such as start to offer coffee.
 Provide optional allergen free food
items such as gluten free and peanut
free. For example, Sugar free for
diabetics.
 Changing thoughts and views of
modern society related with unhealthy
items.
 Government authorities are pressuring
fast food industry through enforcing
healthier menu regulations.
 High competitions such as Burger
King.
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TASK 5
P6: Interrelation of macro-environmental factors with organisational strength and weaknesses
Macro-environmental factors consists of various factors such as political, economical,
social, technological which can affect the strength and weaknesses of organisations operated at
global level such as McDonald's. It can be understood under the following:
Political: It is related with political conditions which influences the activities and plans
made by company during its business operations (Business Environment, 2018). Strengths: McDonald's has good R&D team which brings sufficient knowledge about the
government rules and regulations which makes easy for management to follow.
 Weaknesses: Operated in more than 100 countries thus difficult to understand the
regulations of each country's government (Reed and et. al., 2013).
Economical: It is related with economy fluctuation of country which supports can either
support profitability or can effect in adverse manner. Strength: Operating its business in country having stable economy such as UK, it help
McDonald's to maintain their pricing strategies.
 Weakness: Higher taxation rate by government due to protection people from consuming
junk foods may adversely affect the sustainability and profitability of company (What
SWOT Analysis is in simple words, 2016).
Social: It is related with interest and buying behaviour of customers which can affect the
sales and profitability of company. Strength: Children and teenagers are the targeted people of McDonald's which are
covering maximum amount of population of world.
 Weakness: Changing behaviour may affect the sales of company.
Technological: It is related with up-gradation of existing technologies that brings
effectiveness in business operation. Strength: Giving online payment option of customers encourage people to use debits
card instead of carrying cash (Number of McDonald's employees worldwide, 2017).
 Weakness: Requires huge investment which can affect the profitability.
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CONCLUSION
It has been concluded from the above project report that Business environment is
complex and contingent in nature due to which organisation having different size and types can
either adversely or positively affected. For this, it is required to analyse external and internal
factors which can be possible through conducting PESTLE and SWOT analysis. The role of
various departments in an organisation play a major role in achieving desired goals and
objectives within pre-determined time period.
REFERENCES
Books and Journals
Avramenko, A., 2012. Enhancing students' employability through business simulation.
Education+ Training. 54(5). pp.355-367.
Bovee, C. L., Thill, J. V. and Raina, R. L., 2016. Business communication today. Pearson
Education India.
Commander, S. and Svejnar, J., 2011. Business environment, exports, ownership, and firm
performance. The Review of Economics and Statistics. 93(1). pp.309-337.
Hamilton, L. and Webster, P., 2015. The international business environment. Oxford University
Press, USA.
Karagiorgos, T., Drogalas, G. and Giovanis, N., 2011. Evaluation of the effectiveness of internal
audit in Greek Hotel Business.
Kolk, A., 2016. The social responsibility of international business: From ethics and the
environment to CSR and sustainable development. Journal of World Business. 51(1).
pp.23-34.
Osterwalder, A. and Pigneur, Y., 2010. Business model generation: a handbook for visionaries,
game changers, and challengers. John Wiley & Sons.
Reed, O. L. and et. al., 2013. The legal and regulatory environment of business (p. 328).
McGraw-Hill/Irwin.
Reinhardt, F. L. and Stavins, R. N., 2010. Corporate social responsibility, business strategy, and
the environment. Oxford Review of Economic Policy. 26(2). pp.164-181.
Shigang, Y., 2010. Competitive strategy and business environment: The case of small enterprises
in China. Asian Social Science. 6(11). p.64.
Teece, D. J., 2010. Business models, business strategy and innovation. Long range planning.
43(2-3). pp. 172-194.
Online:
Business Environment. 2018. [Online]. Available
through:<https://www.slideshare.net/NikhilSoares/business-environment-
featuresmeaningimportanceobjectives-porters-model>
What SWOT Analysis is in simple words. 2016. [Online]. Available through:
<http://pestleanalysis.com/swot-analysis-examples/>.
Number of McDonald's employees worldwide. 2017. [Online]. Available through:
<https://www.statista.com/statistics/819966/mcdonald-s-number-of-employees/)>.
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