Business Environment Report: McDonald's, Functions, and Macro Factors

This report provides a comprehensive analysis of the business environment, encompassing different types of organizations (public, private, and voluntary sectors) and their purposes, sizes, and scopes. It examines the interrelationships between various organizational functions, such as production, research and development, marketing, and finance, and their impact on achieving organizational objectives, using McDonald's as a case study. The report also explores the positive and negative impacts of macro-environmental factors (political, economic, social, technological, legal, and environmental) on business operations, utilizing PESTLE analysis to assess these factors. Furthermore, it includes an internal and external analysis of McDonald's, identifying its strengths and weaknesses and their interrelationship with external macro factors. The report concludes with a summary of the key findings and references to supporting literature.

BUSINESS
AND
BUSINESS ENVIRONMENT

Table of Contents
INTRODUCTION...........................................................................................................................1
1. Types and purpose of the organisations ............................................................................1
2. Size And Scope Of Different Types Of Organisation........................................................3
3. Different Organisational Functions And Their Relationship With Organisational Objectives
................................................................................................................................................4
4. Positive And Negative Impacts On Business Operation By Macro Environmental Factors. .5
5. Internal And External Analysis Of McDonald's To Identify Strength And Weakness .....7
6. Interrelationship Between Strength And Weakness With External Macro Factors...........9
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................11

INTRODUCTION
Business environment relate to all internal and external factors which effect and control
the business activity that is business environment, basically there are two types of business
environment micro environment and macro environment. This report discuss about purpose, size
and scopes of different business organisation and also inter-departmental relationship and how
they affect the business and advantages of different functions on the other hand discussion on the
disadvantages. This study also include the different company's environment and working
process, Positive And Negative Impacts On Business Operation By Macro Environmental
Factors, Internal And External Analysis and Strength And Weakness of External Macro Factors.
1. Types and purpose of the organisations
As per report we include the public, private and voluntary sector
Public sector- Public sectors are those sectors which control and owned by the different level of
government they are not working for generate the revenue their main motive is to develop the
lifestyles of the people who are living in the country. NHS is working on the public sector
segment. NHS provides free healthcare facilities and medical services to public. This sector's
main source of income is from Taxes, penalty, fines, fees etc. Public sector can merge their
ventures with private sectors. Examples of public sectors- transportations, communications,
police services, water supply, fire services, municipal corporations, Railways, post office etc
(Bull and et.al., 2016).
Purpose of public sector- There is no motive to earn profit, these sectors have main purpose to
serve the people of nations but its also play the major role in make countries economy strong. Its
develop the economy from the help of different type the government corporations, public sector
is self reliance sector there is not any specific source to make it strong, its help to develop the
backwards place of country, provide the jobs to peoples, invest income in defence service. The
other purpose of public sectors are setup of different system of energy production. Establishment
of Petrochemicals plants, space research project. All the funds are mostly collect from the public
and they invest for the growth of public and nations. The main purpose of the public sector is
provides the service to the community if they are not getting profit from the service they will not
close it government will might continue the service. NHS is a public sector company which have
purpose to provide the service without having motive of profit.

Private sector organisations- The selected organisations of the private sector company is
McDonald's and it offers wide range of food products and services to its customers including
fast food and beverages. Private sector organisations are those organisations which run by the
individual or companies their main objective is maximised the profit by selling company's goods
and services. Private sectors companies are now in every field like in health sector, Education,
Transportation, Banking, Construction, Mining etc. Private sector companies growing very fast
so in result competition in these sectors is very high. Private sector increase their net worth from
the issue of shares, Debentures and franchises. In these sectors government do not interfere with
the business activities, all the control of company is under the company's management. Private
sector's contributions in nation's economy is very high.
Purpose of private sector- As discuss above the main objective of private sector is generates the
profit. . Private companies has desire to expand their business globally, profit is priority for the
company then after customer satisfaction and nations growth comes. Private sector is looking for
the skilled employees who can help in growing of company. there are many more other
objectives also like transformation of the Economy, redistribute the income, source of capital
formation etc. .
Voluntary sector- Voluntary sectors main purpose is helping the society, they are work for the
people who are not able to help themselves, these organisations are not work for the profit. Red
Cross is the voluntary sector company. These sectors are work independently because
government do not interfere in its activities and they are not even bound with many government
policies. Example of voluntary sector- Charities, society welfare, organisation(Srdjevic, Bajcetic
and Srdjevic 2012). red cross is a volunatary sector business who aims at protecting human life
and provides services of emergency assistance, relief from disaster and disaster preparing
education services are also provided.
Purpose of voluntary sector- Profit is not the motive for the Voluntary sectors they are working
for the welfare and enrich the society they develop the nation's by providing the best possible
help. There are many sources which contribute money to the voluntary sector by giving the
donations. There purpose to help the people in country who suffering from the different
problems, purpose of voluntary sector is to improve the lifestyle of people who belong to
backwards area, their purpose is to create social wealth rather than material wealth.

2. Size And Scope Of Different Types Of Organisation
Voluntary sectors:
Red cross Is a voluntary organisation also known as humanitarian organisation.
Background details: the red cross was founded in the year 1863.
Size and scope: Red cross have around 166000 volunteers providing services to public.
Products and services: Red cross provides relief to disaster affected people and have provided
services to people for around 67000 disasters.
Mission and vision of Red Cross is to provide opportunities to young people in engaging in
humanitarian action and services.
Structure of voluntary sector: voluntary sectors are independent body and gets its funding
from taxation. And follows rules and regulations provided by governments. Secretary of state is
responsible for work of Department of health and Social Care(DHSC). DHSC guides public
health and social care (McDonagh and Prothero, 2014).
Private limited company:
Products and services: McDonald operating its business in private sector and is a part of fast
food chain restaurant.
Background details:It was founded in 1940 by brothers Richard and Maurice.
Size: McDonalds operates around 36000 restaurants in 101 countries and serves approx 69
million people every day(Mazzucato, 2015).
Mission and vision of McDonald's is to be favourite place for customers where they can come
and have food and drink.
Structure of private limited company: Private company must have one director and there is no
limit for maximum number of directors. And private company can have many shareholders who
can hold many shares of company. And directors are responsible for adhering the matters of
company law.
Public Limited Business organisation:
background details: NHS started in 1948 by then health secretary named Aneurin Bevan.
Products and services: NHS is public sector organisation and provides free medical services
and healthcare treatment to people. It focuses on improving health outcomes for people.

Size: NHS provides health related services and stands at more than 64.6 million for UK people
and 54.3 million people in England and 1.5 million people are employed under NHS program.
Mission and vision: NHS mission and vision is to provide better healthcare services to people
who are not capable for paying for it.
Structure of public sector: Public company must have at least two directors and the company
should have capital of £50000. A public limited company must trade its share to public and must
have Commencement of Trading certificate.
3. Different Organisational Functions And Their Relationship With Organisational Objectives
Business organisation needs to maintain its operations in a way that it leads to
achievement of goals and objectives of the company. McDonald's operates its business in fast
food chain business and it aims to operate its business functions properly so that it can meet
demands of customers and satisfy them.
Organisational Structure Of McDonald's
An organisational structure shows structure of an organisation which explains the flow of
information. McDonald's follows tall structure for operating its business activities because it is
large business and have many layers within its hierarchy. This benefits McDonald's to maintain
different functional department by properly dividing position and obligations. And this type of
organisational structure helps in benefiting McDonald's to accomplish its goals and objectives.
Various Functional Departments Of An Organisation
The different functions of a business helps in accomplishing the organisational goals by
meeting customers needs. McDonald's operates and manages its business activities by following
tall structure which benefits company with positive outcomes. The interrelationship between
various functional departments of McDonald's are explained as follows.
Production department:Production department communicates with research and development
department to identify the expectations of customers. Then production is made of goods and
services that meets the needs and wants of customers. This helps McDonald's to achieve its
organisational objectives by satisfying customers.
Research and development: Research and development helps to identify the demand of goods
and services of McDonald's in global market. And the need for adopting marketing techniques in

order to influence customers and attract them. This can be done by communicating with finance
department to increase the marketing budget.
Marketing department: Marketing department communicates with sales department about the
marketing techniques used and which can result in positive outcomes so that sales department
gets ready with adequate staff or personnels. Then sales department communicates with human
resource department about the extra staff or personnel required for which human resource
department can recruit and select employees.
Finance department: The finance departments interrelate with other functional department of
McDonald's in a way that it results in positive outcomes. The tall structure followed by
McDonald's allows account and finance department to adjusts or improve its budget for
marketing to meet emerging trends and changes of preference of customers and fulfil their
expectations.
Interrelationship between various functional departments of organisation:
The research and development department focuses on identifying the needs and wants of
customers and their preferences and also identifies the target market for its products and services
which are then discussed with production department. Production department produces and
makes its products accordingly that can meet needs and wants of customers. Both production and
research and development department communicates with finance department so that budget can
be decided. Marketing department to focuses on attracting target customers by using various
techniques and tools. This will benefit McDonald's to focus on target market area and achieve the
overall objective.
4. Positive And Negative Impacts On Business Operation By Macro Environmental Factors
Business operations are managed in a way that it satisfies customers and meet their
demands, which creates trust and loyalty and ultimately overall objectives of organisation are
achieved. Business operations are affected by macro environmental factors that needs to be
managed in order to bring efficiency. McDonald's makes proper analysis of business
environment and its factors to make plans and strategies for its business operations. The macro
environmental analysis is done by using PESTLE, which is as follows:

Political factors: Business is affected by political factors which includes government policies,
political stability, tax policies, foreign trade policy, etc. McDonald's being a private limited
company has various rules and regulations that needs to be followed.
Positive impact: Changes in government policies of foreign trade will bring positive outcome for
McDonald's to expand its business in global markets, and to increase its market share and
revenue.
Negative impact: If government increases tax rates, it will affect McDonald's business operations
and increases its cost which can lead to decrease in number of customers.
Economic factors: the various economic factors which affect business operations are disposable
income of customers, economic growth of a country, cost of labour, etc. McDonald's deals in fast
food chain restaurant business therefore gets affected by various factors of economic factors.
Positive impact: if the cost of a labour decreases it will affect McDonald's to spend less which
will directly affect prices of products and services, and McDonald's may lower down the prices
of products or it may also implement advance technology which may result in positive outcomes.
Negative impact: if a country's economic growth is slow or interest rates are high, then
McDonald's will not be able to grow or expand its business. Because high interest rates decrees
the demand of products and services.
Social factors: the social factors are directly related to belief and attitude of people, culture
followed by them. It also includes population growth of country, education level, etc.
Positive impact: customers now-a-days demanding for healthy food products which affects
McDonald's to come up with new healthy products and increase its market share.
Negative impact: McDonald's operates its business in UK where people prefer one-stop
shopping, so McDonald's gets affected. And in order to meet the demands of customers it should
come up with innovative ideas and satisfy customers.
Technological factors: the business environment is experiencing new and advance technology
in recent times which brings operational efficiency and every organisation adopts technological
advancement in order to accomplish organisational objectives.
Positive impact: the self- service technology adopted by McDonald's has provided positive
outcomes, as it has reduced the labour cost and it brings efficiency as well.

Negative impact: the advanced technological changes are costly and requires training of
employees as well, therefore, it impacts McDonald's to spend more.
Legal factors: the various legislation and practices also affects the business environment. It
includes employment law, health and safety law, consumer law, etc.
Positive impact: now-a-days people focus on healthy foods and healthy and safety measures are
mandatory to be followed by organisation, which puts McDonald's to focus on healthy food
products and satisfy their customers.
Negative impact: if a company fails to follow some legislation provided relating to employment
law, company may face legal issues which will affect the organisation and it will lose its brand
image.
Environmental factors: business get affected by various environmental factors which includes
climatic changes, ecological factors, weather conditions, etc. McDonald's makes its strategies by
keeping in mind various environmental factors.
Positive impact: McDonald's operates its business operation by considering various
environmental issues, and organisation to provide benefits to society and results in creating brand
image of company.
Negative impact: if McDonald's fails to provide benefits to society by ignoring environmental
issues, it will face problem of losing its brand image, its loyal customers and revenue will
decrease and also objectives will not be achieved.
5. Internal And External Analysis Of McDonald's To Identify Strength And Weakness
Proper analysis of internal and external factors results in identifying the key strength and
weakness of an organisation. Both the internal and external factors affect the business and its
operations and it affects decision making as well. McDonald's conducts internal analysis to
identify its internal strength and weakness. And external analysis is done to examine the external
factors which affects business and its operations.
McDonald's uses SWOT analysis to find its strength and weakness, which is given as follows:
Strength: McDonald's focuses on to provide wide range of products to its customers as it deals
in retail markets, which benefits organisation to capture a large market area and increase its
revenue and market share.

Weakness: McDonald's operates its business in retail markets and faces large number of
competition. McDonald's should focus on proper research for identifying the needs and wants of
customers, which can results in gaining advantage.
Opportunities: McDonald's can increase its market share by expanding its business in global
markets. McDonald's can expand its business by introducing new products and services or
bringing innovation in current products.
Threats: McDonald's being a retailer faces a large competition, and it also has a threat of new
entrants in markets. New entry of competition in market will affect the market share of Tesco
and its revenue and profits will also be get affected.
External analysis of McDonald's is done by using porter's five model force, which is explained as
follows:
 Bargaining Power Of Suppliers: McDonald's deals in fast food restaurant business and
offers wide range of food products and services and so it has to maintain large number of
suppliers so that it can provide products and services to its target markets. High number
of suppliers will have low bargaining power which will benefit McDonald's.
 Competitive Rivalry: McDonald's has very large number of competition as it operates
its business in restaurant business. McDonald's needs to make decisions which results in
bringing innovation and creation in its business operations, ultimately benefiting
organisation to gain competitive advantage over its competitors.
 Bargaining Power Of Buyers: McDonald's has captured a large market share by
offering wide range of food products and beverages. And it can focus on bringing
innovation and creation which results in operational efficiency benefiting the organisation
to lower its cost prices and lowering down the bargaining power of buyers.
 Threat Of Substitute Products: McDonald's faces large number of competition which
offers same kind of products and services, so in order to gain advantage over its
competitors it needs to come up with innovative and better products and services.
 Threat Of New Entrants: easy entry in markets will affect McDonald's as it will
increase competition. Therefore, McDonald's has to come up with innovation and
creation in its business operation so that it can help it to increase its market share and
achieve ultimate goals.

By properly analysing the internal and external environments of McDonald's, it can identify its
strength and weakness and available opportunities and threats as well. And McDonald's can
come up with innovative strategies and ideas to gain competitive advantage and increase its
market share.
6. Interrelationship Between Strength And Weakness With External Macro Factors
Internal and external analysis is done to identify strength and weakness. The strength of
McDonald's can be used to gain competitive advantage and weakness needs to be corrected in
order to sustain in competitive markets. The external macro factors also affects the performance
of organisation and decision making. Interrelationship between strength and weakness with
external macro factors is explained below:
Social factors affects lifestyle, customs, culture followed by people and it influences the
needs and wants of customers. McDonald's operates its business in restaurant chain business
offers variety of food products and services to its customers and target markets. McDonald's
focuses on meeting needs and wants of customers and develop its strategies in that way which
benefits organisation to build trust and brand image. Restaurant business is experiencing
emerging trends which needs to be adopted by McDonald's to gain competitive advantages.
McDonald's can aim at improving efficiency in its business operations by considering social
factors.
Technological factors affects business and its operations. Organisations can adopt to
latest and advanced technology to bring innovation and efficiency to satisfy customers. Use of
advance technology such as online shopping benefited McDonald's to satisfy customers needs
and wants and it also increases its market share. McDonald's adopted e-commerce which also
benefited business in increasing efficiency and also less paper work. Whereas, to adopt advance
and latest technology will be very costly and can affect organisation to spend more on training
and development of employees as well, which can be treated as weakness.
Legal factors are rules and regulations provided by government. If there is increased
competition in retail market because of easy entry of business allowed by government's policies.
It affects the business operations of McDonald's and it has to come up with innovation and
creation in order to gain competitive advantages. And it can be strength also if McDonald's can
take advantage of entering in new markets and expand its business.

CONCLUSION
It has been concluded from the report that how different types of organisations sector
works. What are their objectives and how they implement their strategy to achieve that and what
are the benefits they give to the individual and country, and what are the tactics used by the
company to analysis the internal and external environment. Its help organisations to create proper
strategy and its help to improve the performance. SWOT and PESTLE analysis find out the
different factors which affect the organisations and how to prevent the organisations with
affecting it.