Analysis of Impact of Macro Environmental Factors on Business Strategies

Business
Strategy

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1 ...........................................................................................................................................1
P1 Analysis of impact as well as influence of macro environmental factors on business and its
strategies:.....................................................................................................................................1
M1 Critical analysis of macro environment for determining strategic management decisions:..3
P2 Analysis of internal environment of organization along with its capabilities:.......................3
M2 Critical evaluation of internal environment of business for assuring strengths and
weaknesses of internal structure, capabilities and skills of an organization:...............................5
P3 Application of Porter's five forces model for evaluating competitive factors of market for
an organization:............................................................................................................................6
M3 Devising appropriate strategies for improving market position and providing competitive
edge:.............................................................................................................................................7
P4 Application of theories, models as well as concepts for strategic planning of an
organization:................................................................................................................................7
M4 Producing strategic management plan that involves strategical priorities and objectives:...9
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Business strategy indicates combination of course of actions and decisions-making that
leads to achievement of objectives of business. It can be referred as a backbone of business as it
secures competitive position of company in the market (Akter and et. al., 2016). Basis of this
report is strategic analysis of McDonald's. It is a leading organization that serves in restaurant
industry. This report consists analysis of macro environment and its impact and influence on
strategies of business. Further, internal organization of business is assessed. Evaluation and
application of Porter's five forces framework is evaluated. Along with it, theories and concepts
which assists business in understanding as well as interpreting strategic directions are identified.
TASK 1
P1 Analysis of impact as well as influence of macro environmental factors on business and its
strategies:
Overview of company: McDonald's is a US based company that deals in the sector of
restaurant. Entity was founded in 1940. It is an international coorporation that serves worldwide.
Macro environment refers to forces that are outside the control of an organization, that is,
external factors of business environment (Bıçakcıoğlu, Theoharakis and Tanyeri, 2019). Pest
analysis and strategic analysis are two frameworks that study impact or influence of macro
environment on strategy formulation of business. It enables McDonald's to deeply understand
business scenario, further, it exploits opportunities for business and provides to alertness for
threats. It is a public company and have approximately 210000 number of employees.
PEST Analysis:
It is an analytical method that determines assess of external factors on productivity and
profitability of company. Following is the Pest analysis of McDonald's:
 Political Factor: This factor includes political stability in government that affect the
operation of company which include Tax, interest rate and exchange change imposed by
government (Buckley and Ghauri, eds., 2015). McDonald's is functioning in different
countries in the world and has to follow government policies in accordance to country its
operating in, which brings complexity in business operations of company. Political
uncertainty in US leads to economic risk in country due to unstable policies, which
directly or indirectly impacts performance of McDonald’s negatively. As, management of
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firm is unable to accurately formulate strategies effectively. Increase in Corporation tax
rate will lead towards a decrease in the overall profits of McDonald's as the overall
profitability of the organization will be affected. This will help in the attainment of the
goals and objectives in the future.
 Economical Factor: This factor refers to economic condition of individual country that
include growth rate, inflation rate, unemployment and money and demand supply
(Chang, 2016). Disposal income of people in the US is decreasing which negatively
impacts selling of McDonald’s, as, buying capacity of the customer reduces. Household
disposable income of USA is 3.650 and its GDP is 21,374,418.88. GDP have huge
impact on economy of country which directly or indirectly influence performance of
business.
 Social Factor: This factor is important in external environment to study. It includes
social behaviour, taste, preferences and geographical features of people that influence the
operational and growth of company. Attitude of people is changing towards consumption
of it, as, trend of healthy food consumption is increasing. Which decreases demand for
junk food hence, it profitability of McDonald’s is impacted negatively as it leads to
decrement in demand for products of company.
 Technological Factor: This factor refers to technological impact on company that how
much innovation and up-gradation influence the operational process of company.
Technological upgradations provide opportunity to McDonald’s to implement automation
strategies in firm. It enhances customer’s satisfaction level by increasing personalized
experience of buyers. Hence, it positively impacts business operations of McDonald’s
further, implementation of Dynamic Yield technology is about to change drive thru
business of company. It allows customisation of menu options as the food items which
are available in the menu can be customised according to the needs and requirements of
the different types of customers in the market. This helps them to get a desired value for
their money as they can get food items which they desire.
 Environmental Factor: It includes changes in climate or weather, environmental
policies, pressures from NGO’s and other similar factors. Increasing trend of awareness
about environment increases pressure on McDonald’s for incorporation for corporate
social responsibility. This increases expenses of company and reduces its profitability and
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contains negative implications. The packaging of the company was modified to meet the
new environmental laws so that the new environmental requirements are met. Legal Factor: It covers discrimination law, antitrust law, laws related to employment,
consumer protection law, rights of copyright and patents, health and safety measures etc.
according to employment law of US, labour charges are increasing which improves cost
of business and negatively impacts McDonald’s.
Stakeholder Mapping:
It is a framework of evaluating stakeholders of an organization as well as assessment of
their influence in management and planning process (Chen, Eshleman and Soileau, 2017).
Stakeholder analysis of McDonald's is described below:
Stakeholders analysis
Interest
Power
Low High
High Government Managers
Low Customers Employees
High power, High interest: It is vital for business to manage such stakeholders
thoroughly. Managers of business includes in this section. As, they form strategies for business
and has huge impact of business profitability (González-Rodríguez and et. al., 2018).
McDonald's is high depended on decision making of managers hence, they have huge influence
on business.
High power, Low interest: It consists stakeholders which have high power in an
organization but contains low interest in it. Government comes under this section. Because,
government has power to make rules and regulations that influences working of McDonald's at
high level, But, it does not have any interest in profit making policies, effectiveness or conflicts
of entity. Hence, anticipating actions of government and meeting their needs or requirement
plays a vital role in ensuring sustainability of McDonald's.
Low power, High interest: This group of stakeholders contains high interest on strategic
planning of business but do not have any power for making, changing or alternating them.
Employees of company comes under this category. Reason is that implementation of any policies
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