Business and Business Environment Report: McDonald's and Burger King

This report provides an in-depth analysis of the business environment, focusing on various types of enterprises, including private and public companies, with specific examples of McDonald's and Burger King. It explores the purpose, size, and scope of different organizations, examining their legal structures and the relationship between organizational functions such as design and production, human resources, finance, marketing and sales, and administration. The report also investigates the positive and negative impacts of the macro environment on business activities, as well as internal and external analyses of organizations to identify strengths and weaknesses. Furthermore, it examines the interrelationship between a firm's strengths and weaknesses and external environmental elements. The report covers the structure and objectives of firms, the functions within an organization and how they link together to achieve business goals, and the role of stakeholders.

Business and
Business
Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Various type and purpose of enterprises...........................................................................1
P2 Scope and size of different type of firms..........................................................................3
TASK 2............................................................................................................................................4
P3 Relationship between various organisational functions and their link with structure and
objectives of firm....................................................................................................................4
TASK 3............................................................................................................................................7
P4 Positive and negative impact of macro environment on business and its activities..........7
P5 External and internal analysis of organisation for identifying its strengths and weakness9
P6 Interrelationship of firm's strengths and weakness with external elements of environment
..............................................................................................................................................10
CONCLUSION..............................................................................................................................11
........................................................................................................................................................13

INTRODUCTION
Sum of all the internal and external factors that directly affect the activities of an
enterprise is known as business environment (Chavis, Klapper and Love, 2011). Keeping all
these elements in the mind before execute business activities is very necessary. Success of
business operation is depend on these and the changes that take place on these elements.
Basically these factors affect the activities of a business who is operating on an international
level. Main reason behind this type of evaluation is to make better and effective strategies for the
business. This provide guidance to the business manager and help him in taking important
decisions about the company (Business environment, 2017). McDonald an American fast food
restaurant is taken under this report for study. Today firm is providing its services through more
than 36,900 stores in number of countries. Company serve more than 69 million customers and
earn number of profits. Burger a private firm dealing in same sector is the another organisation
which is taken under this report. Different type of enterprises their main purpose of operating,
size and structure is also detailed in this. What is the relationship among various function of a
company and they get affected by its structure and size is also mentioned in this essay.
TASK 1
P1 Various type and purpose of enterprises
Business activities are executed by individuals or group of individuals with the aim of
earning of number of profits. For this research is conduct by business owner to first identify the
features which customers want in the company's product. Production, operation, selling and
distribution are number of activities which are executed in an organisation. Level and
effectiveness of these operations is affected by the size of the firm. Big enterprises execute these
on a large scale while small firms operate this on a small basis. Effective implementation of all
these activities is very necessary as this decide the success of company's product. Earning more
profit or generate large number of revenues is one of the main purpose of every business
enterprise. Further different type of companies with their main purpose can be understood by the
points stated below:
Private limited company: Firms which are controlled by the private hands of an
individual or group of individual is known as private limited company. These type of companies
do not invite public for buying the shares. Number of shareholders is restricted to 50 under this.
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Profit earning is one of the main purpose of these type of companies. Burger King is an example
of this. Further, this private organisation is divided into following parts: Sole trader: When all the activities of a business are managed by an individual and he is
the only one who suffer all the losses and gains rise from that business than this is known
as sole trader. All responsibility lies on the shoulder of that individual. Huge amount of
profits and quick decision making is one of the main advantage of this. Partnership: When two or more than two individuals decide to start the business
operations than that come under the concept of partnership. Main advantage of this is that
it creates synergy which help in taking effective business decisions. Before starting the
commercial activities a written document called partnership deed is signed by all the
individuals. This include the name, address, share of profit of every partner. Main
advantage of doing this is that it remove the chances of rising conflicts and at the same
time clear all the roles and responsibilities of every partners which increase the
effectiveness of business activities. Franchising: This is one of the popular form of private business in today's business
environment. Under this concept, owner of a popular and positive brand image give right
to a person called franchisee to use his brand image for selling his products for some
given time duration in exchange of some consideration known as royalty fees. McDonald
is an example of this concept.
Public company: Enterprises which are controlled by the government (wholly or
partially) is knowns as public limited firm. Produce innovative product in order to fulfil the
requirement of customers is one of the main objective of these type of companies. These
companies issue shares and invite general public to buy the same for raising capital. A work
called PLC is kept by the company after its name. For taking suggestions and approval of the
shareholders a meeting called annual general is meeting is held by the manager of company
every year. In that meeting critical issues of the company are discussed in that meeting and
suggestion of shareholders is taken by the company about the expansion of business activities.
McDonald is a public firm. Legal structure of a public firm is stated below:
 It is very essential for a public limited firm to have at least two board directors for taking
decisions about the business activities. All the important decision are taken by the state government in this.
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Voluntary sector: When a firm is formed by some individuals with the aim of doing
social welfare of the individuals living the society is knows as voluntary firm. These type of firm
formed with the aim of doing social development of people rather than earning profit. These type
of companies also known as non profit firms. OXFAM is an example of this. Various activities
and efforts are done by the company to remove poverty from the world and to provide basic
facilities to the people. For this firm collect funds from the people and try to provide basic
facilities such as food, shelter and cloth to poor people.
P2 Scope and size of different type of firms
Scope of commercial activities of an organisation is largely depend on the nature of its
business and on its size. Companies who operate on a big level carry more scope with it while
organisation which operate on a small level carry little scope with its activities. Scope of two
organisations Burger King and McDonald is stated below:
Name of company McDonald Burger King
Type of organisation Public Private
Income of firm Approx 4.575 billion Approx 1.752 billion
Employees of company 364000 Approx 346000 Approx
Customers of organisation More than 70 million per
month
More than 65 million per
month
Rage of products Variety of drinks, burgers,
french fries and many more
Drinks, mocktails, fires and
many other.
Market share of organisation 50.00 % approx 16.52% approx
Number of stores 50000 15000
Variety of commercial activities are executed by the burger king for generating more
number of profits. Presently firm is serving its customers through more than 15000 stores in
variety of locations. Variety of drinks and food products are serve by thee company. Effective
promotional tools are used by the company to attract more customers. Recently firm set a budget
of 800 million approx for its marketing operations. Recently firm launch a new food product
called Big King sandwich for getting attention of more customers on it.
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McDonald is a public company who is operating through more than 50000 stores in more
than 150 countries. More than 364000 employees are working in the company who serve the
customers effectively to satisfy their needs. Variety of drinks such as milkshakes and cold drinks
are served by the company to its customers. Promotional activities of firm are also very effective
approx 10 percent of firm's revenues are spent on its advertising. T.V, magazines and
newspapers all are used by the company for advertising its goods.
Stakeholders: Individuals who take part in the activities of business and provide their various
resources and opinions for achieve set targets is know as stakeholders. They can be internal or
can be external. It is the fist responsibility of every company to fulfil the needs and interests of
its stakeholders for getting their commitment in the business operations. In this way company
can increase the its positive image in the mind of its customers.
TASK 2
P3 Relationship between various organisational functions and their link with structure and
objectives of firm
Various functions are executed in an enterprise on different levels for achieving the set
targets. For maintaining the quality of firm's products it is very necessary that all the functions
should be performed effectively. Different function are there which are executed in McDonald
for serve customers in an effective way. Main function and relationship among them can be
understood by the following points stated below: Design and production: Design of the final product offer by the company to its
customers play an effective role in its overall success. For motivating an influencing
more individuals towards its offering it is very essential that design of it should be
effective (Commander and Svejnar, 2011). Main feature of McDonald which attract
more customers it that firms serve products as per the culture of the country in which firm
is operating. Human resource function: Workers are one of the main element of success of every
enterprise. These are the one who make final products for large number of customers in
order to satisfy them. McDonald is very popular for the quality of its food products and
its talented employees are the main reason behind this. All this help the firm in getting
competitive advantage (Eckardt, 2012). Effective strategy is used by the organisation to
ensure that employees are utilising all the available resources and at the same are making
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quality food products. For getting desired results it is very necessary that all the relevant
information should be deliver to all the staff members so that they can take decision
accordingly. Finance: Identification of funds required by all the departments, making budget and allot
the funds all this come under the main responsibility of a finance department of every
enterprise. Huge funds are required by the firm operating on a large scale while small
funds are required by the small enterprises. Due to operating on a large level huge
resources are required by the company for serving customers effectively. Because
shortage of money create unnecessary obstacles in the functioning of the company that's
why firm has to arrange all the financial resources in advance so that it can better satisfy
its customers. This increase the responsibility of finance manager to allocate funds to all
the department so that they perform their duties effectively. All this help the organisation
in achieve its objectives easily. Marketing and sales: Identify the needs of customers and make products as per their
requirements all this come under the function of a marketing department. This is the only
department which execute various promotional activities to increase the sale of firm's
product (Eisenberg and Miller, 2012). For attain the set business objectives this
department first collect relevant data and than use this for making effective decision
regarding the business activities. Department of sales do various efforts to make the
selling process more effective and increase the loyalty of customers towards the firm's
product.
 Administrative function: Various support activities such as handling the issues and
complaints of customers, send them important mails and many more are done by this
department of company. When company operate on a big level and have a high market
share than this increase the complexity of this function. Further various operation of this
department support the company in achieve its end results and objectives.
For increase the share of its market to operate smoothly it is very necessary that McDonald
should perform all its functions in an effective way. Coordination must be there in all activities
of company.
Structure of organisation
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Arrangement of various parts and relationship among them is known as the structure. It
shows the flow of information in the company. Number of structures are available which can be
used the companies (Organizational Structures, 2017). Type of structure increase the
effectiveness of company's operations so it is very necessary that effective structure should be
used by McDonald for operating. At present divisional organisation structure is follow by the
firm which increase its flexibility of its operation. Under this structure all the functions of
company are arranged as per the geographical locations. Divisions as per the level of employee's
performance, global hierarchy and formation of groups as per the various functions all are the
main characteristics of this structure. Continuous monitoring and evaluation of all the operation
is one of the main benefit of this organisation structure.
Organisation structure of burger king
Number of changes are done in the structure of burger king especially in the concept of
leadership and ownership. The structure of the firm is defining the composition of its various
activities for achieving the set objectives. It is necessary for the company to do some
modifications in its corporate structure for addressing the issues of business environment.
Recently various reforms are done in the structure of company for improve its performance.
Global centralisation and division is one of the main benefit of this organisation structure
(Hamilton and Webster, 2015). More detail about the organisation structure of burger king can
be understood by the following:
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TASK 3
P4 Positive and negative impact of macro environment on business and its activities
Average of all the elements exist outside the enterprise which affect the business
operations of a firm is known as the macro environment. It also knows as external environment
of a business which is uncontrollable by the entity. Evaluation of these elements before
expanding business activities is very necessary (Jayeoba, 2012). This affect the strategy
formulation process of a company. For this an effective tool called PESTLE analysis can be used
by McDonald for formulating better policies. This can be understood by the points stated below: Political factors: For maintaining the economy and value of currency various rules and
regulations are set the government of every country. Every company is liable to regulate
business operations as per those set rules for operating effectively. Sometimes all those
create unnecessary obstacles in functioning of the company. Increase rate of tax, excise
duty all this come under the regulations set by the government of country. Further various
safety and health related issues set by the government affect the operations of McDonald. Economic factors: This factor is largely relate with the income level of citizens of
country in which firm is executing. Further various rates such as wage, inflation,
deflation, rate of loan and many more come under this. All this affect the operation of a
company. People have high level of income will increase the sales of food products sale
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by the McDonald. On the other hand lower purchasing power of customers will decrease
the sale of its products. Social factors: This is the another element which affect the operation of company in both
positive and negative way. Lifestyle, changing patterns, habits and trends exist in the
market all points are covered under this factor (Klapper, Lewin and Delgado, 2011) . For
satisfy the needs and wants of customers and to operate effectively it is very necessary
for manager to first research all these factors. For increasing loyalty and trust of
customers it is very necessary for the McDonald to firsts study the culture in which its is
operating and then offer food products as per this. Technological: Methods, process and various procedures which are used by the company
for making products is come under the technology. Every individual like updated
products and services do this can b done b y the McDonald for attracting more customers
towards its outlets (Klapper, Lewin and Delgado, 2011). Further technology used by the
company for promoting its products is also come under this. For this various media such
as print, internet, electronic are used by McDonald for attracting more customers. Environmental: Number of factors and activities of company negatively effect the
environment. For this government make various standards with the aim of save the
environment. It is very necessary for McDonald to use quality raw material for its food
products and tastes of customers should be keep in the mind before deciding final menu.
Further defective methods must be used by the company to decrease the negative impact
of that on environment.
 Legal: Various rules and regulation are set by the government of a nation with the motive
of safeguarding the basic rights and duties of both employees and citizens (Krishnan,
2013). All this affect the policy and strategy formulation process of a business and affect
its activities also. Main benefit of this is that help the employees in getting fair wages for
their work.
All these are the main external or macro factors which exist outside of an enterprise and
largely affect the decisions of business. Adoption of this approach will help the manager of
McDonald in getting how external factors can affect the activities of this. By doing this effective
strategies can be made by the company for achieve its set results and targets.
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P5 External and internal analysis of organisation for identifying its strengths and weakness
Commercial operation of a business get affected by various elements sexist in internal
and external environment. Identification and evaluation of all those factors is very necessary.
Main advantage of doing this is that it helps the managers in getting information about the
strengths and weakness of the company. At the same time help the entity in finding any
opportunity exist in the business environment. This analysis help the top managers about the
activities executed by its rivals and guide the firm how to get competitive advantage. So this can
be done by the managers of McDonald for identify the strengths and weakness of the company.
In this way firm can attract more customers towards it and can formulate effective policies.
SWOT of McDonald can be understood by the following points:
Strengths
Capabilities of a company which aids in the success of company is known as strength.
Effective organisation structure and positive brand image is one of the main strength of
McDonald (Love, 2011). This attract number of customers every year. Further company make
and offer variety of food products to its customers through which company generate large
amount of profits every year. Participation of company in various social activities is one of the
main reason which increase the positive brand image of the firm.
Weakness
To operate smoothly and to deliver effective services to the customers firm provide
effective training to its employees which increase the cost of firm's operations. To start this kind
of operation huge investment are needed in the initial stages. Due to reducing income of
customers market share of the company is decreasing on continuous basis. Along with this,
processed food products of company fails to satisfy the needs of customers who are health
conscious.
Opportunities
For attracting large number of individuals firm can offer discount to its customers on
various food items. Further firm can organise some events and programmes for increasing its
positive values in the mid of its customers. Concept of internet marketing can be used by the
company for capturing more market share (Macdonald, 2012). In order to satisfy the needs of
health conscious customers firm can make some deliver organic food products.
Threats
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As more people are becoming health conscious, this is decreasing the demand the junk
food in the market. Further large number of competitors also serve a huge threat for the firm.
Along with this a little change in the income level of consumers, wage rate and many more
directly affect the sale of McDonald.
All these are the main strengths, weakness, opportunities and threats of McDonald.
Strengths and weakness are internal as they are remain in the control of the company. But on the
other hand opportunities and threats are external because they create due to the change take place
in the external environment. By doing this analysis McDonald can make better and effective
strategies for its operation for achieve the set targets.
P6 Interrelationship of firm's strengths and weakness with external elements of environment
Strengths and weakness of a firm both are internal but these are largely affect by the
elements exist in the external environment of a business. Fast change in the needs and wants of
customers, political instability and legal environment of a country all these are the main reasons
behind this (Mojaveri and Fazlollahtabar, 2012). It is very necessary for a company to identify
how these are interrelate with each other for executing effectively. Same apply in the case of
McDonald as firm is operating on an international level in different countries it become essential
for the company to identify this for generating more profits. Interrelationship between external
environment and strengths and weakness of McDonald can be understood by the points stated
below:
Strengths: Unique qualities of a company which help it to get competitive advantage over its
rivals is refer as strengths. But these capabilities get affect by the changes take place in the
business environment. For example government of every country do some changes in the
business policies or timely introduce some new rules and regulations to control the operations
and economy of the country (Myers and Korsmo, 2014). Every company has to follow these
rules to operate in that country. All this sometime create unnecessary pressure on execution of
firm's operations.
Technology is one of the external factor which has a great impact on the business
operations. All customers like updated products that's why it become very necessary for the
organisation to adopt new technology in the production process. This affect the business and its
employees as now workers has to learn how to work on new technology and many more. It
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