Regent College HND Business Environment Analysis: McDonald's Report

This report provides a comprehensive analysis of McDonald's business environment. It begins with an introduction to business environments and then delves into the organizational functions of McDonald's, examining their interrelationships and links to organizational objectives and structure. The report then explores the positive and negative impacts of the macro environment on McDonald's business operations, utilizing the PESTLE framework. Furthermore, it includes an internal and external analysis of the organization to identify its strengths, weaknesses, opportunities, and threats (SWOT). The report concludes by summarizing the key findings and insights gained from the analysis. The report highlights the importance of understanding both internal and external factors for effective strategic decision-making within the fast-food industry, with a focus on McDonald's.

Business
Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
Covered in PPT.......................................................................................................................1
TASK 2............................................................................................................................................1
P3 Relationship between various organisational functions and its link with organisational
objectives and structure..........................................................................................................1
TASK 3............................................................................................................................................3
P4 Positive and negative impacts of macro environment on business operations.................3
TASK 4............................................................................................................................................5
P5 Internal and external analysis of organisation for identifying its strengths and weakness5
P6 Interrelationship of strengths and weakness with factors of external environment..........6
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Environment refers in which a business firm operates and execute various commercial
activities with the aim of earning profit is considered as business environment. Large number of
internal and external factors exist in this which largely affect the operations of a firm (Chavis,
Klapper and Love, 2011). For achieving success or before taking any action it is very necessary
to identify and study the factors prevailing in the surrounding because these elements can hamper
their business activities. Managers of big large scale companies make policies and strategies after
evaluating all the components of it. Analysis of competitors, firms are also covered under the
study of business environment (Business environment, 2017). McDonald, a fast food giant
company existing in almost all the countries is taken under this report. Burger King is another
private firm which is catering in the same sector is also mentioned in this. Various types of
organisation with different purposes are discussed in this report. Further, various size of firms
and scope of their business activities is also mentioned under this. How various functions of an
enterprise are directly linked with the structure and objectives of business and impact of external
environment on the activities of business organisations is also detailed under this essay.
TASK 1
Covered in PPT
TASK 2
P3 Relationship between various organisational functions and its link with organisational
objectives and structure
Different functions are carried out in an enterprise for making an effective products and
services to satisfy the needs and wants of customers. For achieving success, it is very necessary
that all functions should be performed effectively. For capturing a larger market, it is very
necessary for the McDonald to perform all its operations in a proper way. Main functions of
McDonald can be understood by the following points: Production and design: For influencing large number of people to buy the products of
firm, it is very essential for McDonald to design the process and products in an unique
way from its competitors (Commander and Svejnar, 2011). One of the main speciality of
the McDonald operations is that firm gives shape to its activities as per the culture in
which firm is operating. This is one of the main reason why firm attracts large number of
customers. Labour, equipment and capital are the main elements of production process.
1

 Human resource function: Employees are one of the valuable assets of every enterprise
specially for the firms who are operating in an hospitality sector. It is very important for
every firm to hire skilled candidates for performing various jobs in a firm. Today large
number of capable candidates work in McDonald who maintain the quality of products
and satisfy the needs of customers (Eckardt, 2012). This is the reason that today firm
capture a larger market shares and has competitive advantage over its rivals. Firm follow
an effective policy and strategy which helps in ensuring that employees are making
quality products. For perform better in the future, it is very necessary that all crucial
information should be delivered to the staff members so that they can give direction to
their activities for attaining the business targets. Finance: No firm can survive without sufficient amounts of funds. Enough amount of
finance is needed by every company to execute business operations. Shortage of money
creates unnecessary obstacles in execution of firm activities. So it is the responsibility of
the finance manager to first identify the needs of funds required and then make sure that
firm have enough resources to execute business activities. Function of sales and marketing: Marketing is one of the main departments of every
organisation because various operations are undertaken by this area in order to first
identify the demands of customers. After collecting information company uses it in the
production process and do necessary modifications in the current products in order to
satisfy the requirements of customers. All this increase the sales of product. Unique and
better goods develop the trust and loyalty of consumers towards firm's goods. Administrative function: Administrative department of the enterprise undertake various
important activities of business like handling complaints and issues of the customers
sending them mails and many more (Eisenberg and Miller, 2012). Along with this, this
area creates the supported documents for the business operations in the forms of
newsletter and business memos.
 Operation: Process of making final product and service is knowns as the function of
operation. It is very necessary that effective methods and process should be adopted by
the firm as this help in maintaining the quality of the products.
For operating business in an effective way and to increase the level of profit it is very
necessary for the McDonald to execute all these functions in an effectively (Organizational
2

Structures, 2017). For this good communication and information should be there with every
manager of the department so that there can be proper coordination among various activities.
Structure adopted by McDonald risen the efficiency of its activities.
All these functions of a firm are interrelate and contribute equally in the success of the
organisation. All these functions help in making a final product with quality so it is very
necessary there should be a coordination among all these function so that set objectives can be
better achieve by the firm.
Structure adopted by the firm show the flow of responsibilities in a firm. This also affect
the various activities and functions of an organisation. McDonald follows a divisional structure
which encourage the flexibility of business operations (Hamilton and Webster, 2015). Under this
structure all the functions of enterprise are as per the geographical areas. Following are the main
characteristics of this structure:
 Global hierarchy
 Division based on the performance of employees.
 Groups are made according to the functions.
One of the main advantage of using this structure is that this continuously monitors the
various activities which has to be undertaken in the enterprise.
Various structure of organisation
3

 Bureaucratic enterprise: Under this type of organisation structure enterprise follow a
rigid procedure for managing the change. Under this an organisational chart exist for
every department and responsibilities are divided for the personnel who held liable for
the change.
 Parent: A parent company is a larger organisation that has the ownership of a subsidiary
firm. Acquisition of smaller firms is the main reason behind the formation of parent
company.
TASK 3
P4 Positive and negative impacts of macro environment on business operations
Macro environment is also known as external environment and this includes various
factors which are uncontrollable by the firm and largely effect on the business operations. It is
essential to identify and evaluate these factors so that better strategies can be made by a
enterprise for achieving set targets and objectives. Legal, political and economic all factors come
under this (Jayeoba, 2012). For this PESTLE can be used by the McDonald. Political: Government of every country set some rules and regulations for operating
businesses in that country. This also affect the operations of an enterprise. For example; if
government will increase the tax rate or do a modification in the excise duty then this will
affect the activities of McDonald. Government of every country made some health
related rules with the motive to deliver quality food products to large number of
customers. Economical: Economic factors like the income level of customers, wages, employment
rate, rate of inflation and deflation exist in the market all influence the sales of firm's
product (Klapper, Lewin and Delgado, 2011). For example; in case of lower income level
of customers and higher purchasing power no one will like to consume the food products
and services of McDonald because this will decrease the purchasing power of customers. Social: This is another factor which effect the business operation in both positive and
negative way. Changing lifestyles, tastes and preference and habits of customers all come
under this. It is very important for the manager of every firm to first study these factors
because today people purchase things according to the trends present in the market.
Along with this, whatever culture exist in the country is another element which should be
4

considered by the organisation before making a final menu. By doing this McDonald can
gain the trust of its customers and can positively increase its sales. Technological: Technology can be refers to as the process and methods existing in the
market for serving large number of customers. For attracting more consumers and to
increase the profit margin it is very necessary for enterprise to use the updated
technology. McDonald uses various technologies for promoting its food products like
print media, internet, billboards and many more. Along with this firm use effective
process for making the food products so that cost can be minimised and quality of food
item can be maintained. Environmental: There are large number of factors which exist in the environment and
affect business operations. Before deciding final menu it is very necessary for the
McDonald to identify the factors which can affect the implementation of firm strategy
and its mission statement (Klapper, Lewin and Delgado, 2011). Along with this,
effective process and methods should be used by the firm so that it can not affect the
environment.
 Legal: Government of every country made policies regarding the functioning of business
in that country. All this one by the government for safeguarding the basic rights of
employees and influence the employer to make policies by considering all the legislation
of employment just like Equal pay and discrimination. One of the main advantage if this
is that it helps in providing fair wages to the employees working in enterprise.
Identification of factors exist in the external environment and their effect on commercial
activities is very important for every manager in order to decide the future actions. PESTLE
approach can be used by the McDonald for getting the fact how external factors affect its
business activity (Krishnan, 2013). In this way firm can serve better and quality products to large
number of customers and can get their trust and loyalty. This will positively increase the sales of
firm's product and firm can capture a larger market share than its rivals.
Impact of digital revolution
Digital revolution introduce number of new technology. All this first effect the
production production of an organisation. As consumers like updated products that's why all the
firms adapt the new technology for serving its customers. Further this also change the consuming
patterns of large number of customers.
5

Overcome resistance to change
For achieving better results from the transformation process it is very necessary to
minimize the resistance of employees. For this various type of incentives both monetary and non
monetary can be used by the managers for encouraging the contribution of employees in the
process of change.
TASK 4
P5 Internal and external analysis of organisation for identifying its strengths and weakness
Environment in which a business operates include large number of elements which
largely effect on the activities of business. For operating business effectively, a manager of this
business enterprise is responsible to identify the factors and their effects on commercial
operations. One of the main advantage of identifying these factors is that they provide many
opportunity to the business to identify its own strengths and weakness which help in making
future planning. It can be said that identification of factors reveals the SWOT of firm. Same can
be use by the McDonald for identifying its strengths, weakness, opportunities and threats. By
doing this firm can achieve competitive advantage over its rivals and can make better and
effective policies over its rivals. Further, SWOT of McDonald can be understood by the
following points:
Strengths
Effective structure of organisation aids efficiency in the various functions of firm.
Positive brand image of the firm is one of its biggest strength. This ensures the quality of is food
products and at the same time attract large number of customers every day. Main logo of the firm
is very popular among large number of people (Love, 2011). Along with this, variety of food
products and effective services increase the number of profits of enterprise. Further, firm take
part in various social activities which enhance the positive image of company in the mind of its
customers.
Weakness
For serving customers effectively training is provided to all employees which increase
cost of the firm's operations. Initial cost of starting this type of venture is very high. From a long
time firm did not done any modification in its products. Further, the market hare of organisation
is decreasing continuously which is reducing the income and market share of firm. Processed
food products of firms are fail to satisfy the needs of various customers.
6

Opportunities
For capturing a larger market share firm can give some discount to its customers. By
conducting and taking part in different programmes and events firm can increase it positive
image in the mind of its customers (Macdonald, 2012). Further, internet marketing can be used
by McDonald for serving more customers. For satisfying the needs of health conscious
customers firm can make and deliver organic food products.
Threats
Large number of competitor is one of the biggest threat for the firm. Due to increasing
number of health conscious customers most people do not like to have junk food. Economic
condition and income level of customers is one of the factor which affect the sale of McDonald
and a little change in this affect the sale of firm's products.
All these are the main strengths, weakness, opportunities and threats of firm.
Identification of these support and guide the manager to make strategies for business activities
for delivering better services to large number of customers.
P6 Interrelationship of strengths and weakness with factors of external environment
In today's business environment where needs and wants of customers are changing at a
fast speed. It become necessary for every firm to identify its strengths, weakness, opportunities
and threats because this guide the manager in making policies regarding the various functions of
business (Mojaveri and Fazlollahtabar, 2012). SWOT of firm get affected by various factors
exist in the business environment. Further how strengths and weakness of enterprise get affected
by various elements of external environment can be understood by the following points:
Strengths: Capabilities and effective services of an enterprise which make it different
from the other is known as strengths. In the case of McDonald, firm has a positive and effective
brand image which attract large number of customers. Change in external factors affect the the
strengths of a firm.
 Political environment of firm include the policies made by the government for operating
business in that country and these sometimes affect the capabilities of an enterprise. For
example an introduction of new policy by government to implement business and to
control the situation can affect the functioning of a firm (Myers and Korsmo, 2014). For
executing effectively it become very necessary for the firm to do necessary modification
in its activities.
7

 Change in technology is one of the macro factor which also affect the strengths of a firm.
Introduction of new technology affect the sales of firm. Whenever a change take place in
the technology than it become necessary for the business enterprise to use that for
attracting large number of customers because customers like up to date and new products.
 Further, needs and wants of customers also one of the external factor which affect the
strengths of a firm (business environment, 2017). So it should be consider by the manager
of McDonald so that enterprise can make products according to their needs.
Weakness: Lack of ability of firm which negatively affect its sales is known as weakness.
Identification of these is very necessary because this also guide the manager to make business
policies accordingly. This help the firm in getting long term advantage in the market. Sometimes
these also affect by the change take place in the external environment.
 Rules and regulations exist in a country affect the activities of business. Large number of
rules make it difficult for other firm to conduct their activities in that nation. This serve as
a obstacle and increase the complexity of business operations.
 Further, for achieving set targets economic condition of a country also contribute a lot.
Because if the income and purchasing level of customers will not be high than people
will not spend their moneys on products (Welford, 2013). So changes take place in the
economic condition serve as a weakness for the firm.
Strengths and weakness of a firm largely affect by the factors exist in the business
environment. Identification of these is very necessary because it not only help the firm capturing
a larger market share but also support the manager to batter satisfy the needs and wants of
customers (Rankin, Windsor and Wahyuni, 2011). By doing this McDonald can make better
policies and can achieve efficiency in its business operations.
Competitive environment: This include the actions taken by the competitors and
strategies adopted by them for executing business operations. All this largely affect the activities
of an enterprise. Every company want to capture a larger market share than its competitors that
why analysis of every activity of its rivals is done by the firm for achieving the set market
objectives.
Government intervention: Any action which is taken by the government in the market
which affect the economy of a country is know as government intervention. All this affect the
economic level of a country which indirectly affect the sale of a company product and service.
8

CONCLUSION
From the above information it can be concluded that identifying factors exist in the
business environment and effect of that on the commercial activities is very essential for a firm
like McDonald. By doing this managers of firm can make effective policies and strategies for
capturing a larger market share than its rivals. There is a direct link between various functions of
enterprise so by bring coordination in various functions firm can achieve success in a better way.
Internal and external factors affect the operations of business both in a positive and negative way
so these should be identify by the managers so that set targets can be achieved by the firm. By
doing external and internal analysis McDonald can identify its strengths and weakness. SWOT
and PESTLE both can be used by the firm to get information about what is going on
environment and what should be done by the firm for increase the number of its profits.
9

REFERENCES
Books and journals
Chavis, L.W., Klapper, L.F. and Love, I., 2011. The impact of the business environment on
young firm financing. The world bank economic review. 25(3). pp.486-507.
Commander, S. and Svejnar, J., 2011. Business environment, exports, ownership, and firm
performance. The Review of Economics and Statistics. 93(1). pp.309-337.
Eckardt, M., 2012. The European Private Company: Do we need another 28th private company
law form in the EU? On regulatory competition of corporate law.
Eisenberg, T. and Miller, G.P., 2012. The English versus the American rule on attorney fees: an
empirical study of public company contracts. Cornell L. Rev.. 98. p.327.
Hamilton, L. and Webster, P., 2015. The international business environment. Oxford University
Press, USA.
Jayeoba, F.I., 2012. NEED-GOAL INTEGRATION AND ORGANISATIONAL TYPES;
IMPLICATION FOR INDUSTRIAL RELATIONS. European Scientific Journal. 8(19).
Klapper, L., Lewin, A. and Delgado, J.M.Q., 2011. The impact of the business environment on
the business creation process. In Entrepreneurship and Economic Development (pp.
108-123). Palgrave Macmillan UK.
Klapper, L., Lewin, A. and Delgado, J.M.Q., 2011. The impact of the business environment on
the business creation process. In Entrepreneurship and Economic Development (pp.
108-123). Palgrave Macmillan UK.
Krishnan, A., 2013. Culture As a Successor of Quality Initiatives: A Review. International
Journal of Social Science. 2(1). p.53.
Love, V.J., 2011. Private company accounting: A concept whose time has come. The CPA
Journal. 81(2). p.16.
Macdonald, R., 2012. Unilever. A Strategic Analysis.
Madsen, D.Ø., 2016. SWOT Analysis: A Management Fashion Perspective.
McDonald, M. and Wilson, H., 2011. Marketing plans: How to prepare them, how to use them.
John Wiley & Sons.
Mojaveri, H.S. and Fazlollahtabar, H., 2012. Designing an integrated AHP based fuzzy expert
system and SWOT Analysis to prioritize development strategies of Iran agriculture.
Revista de Management Comparat International. 13(1). p.117.
Myers, M. and Korsmo, C., 2014. Appraisal Arbitrage and the Future of Public Company M&A.
Rankin, M., Windsor, C. and Wahyuni, D., 2011. An investigation of voluntary corporate
greenhouse gas emissions reporting in a market governance system: Australian
evidence. Accounting, Auditing & Accountability Journal. 24(8). pp.1037-1070.
Welford, R., 2013. Hijacking environmentalism: Corporate responses to sustainable
development. Routledge.
Online
business environment. 2017. [Online]. Available through:
<http://www.investorwords.com/19252/business_environment.html>. [Accessed on 4th
September 2017].
Internal stakeholders. 2017. [Online]. Available through: <http://businesscasestudies.co.uk/co-
operative-food-group/ethically-serving-stakeholders/internal-stakeholders.html>.
[Accessed on 4th September 2017].
10