Analysis of McDonald's International Business Environment and Strategy

This report provides a comprehensive analysis of McDonald's international business operations, examining various aspects of its global environment. It begins by explaining the international business environment and the mechanisms that regulate international trade, focusing on the political, economic, social, technological, legal, and environmental factors affecting McDonald's. The report further explores how cultural and environmental differences in other countries impact business operations, including aspects such as body language and communication. It also delves into the influence of the financial environment on global business, including currency crises and the effects of globalization. Additionally, the report discusses the reasons behind McDonald's international expansion, such as diversification and foreign investment, and outlines the business strategies the company adopts when operating internationally, including generic, intensive growth, transactional, and global strategies. The report concludes by summarizing the key findings and referencing relevant sources.

INTERNATIONAL
ASPECTS OF BUSINESS

Table of Contents
INTRODUCTION...........................................................................................................................1
1.1 Explain international environment of business of Mac Donald's..........................................1
1.2 Mechanism to regulate the international trade.......................................................................2
2.1 Environment and culture of other country affects the operations of business.......................3
3.1 Financial environment affects the global business................................................................3
4.1 Reasons to operate business internationally..........................................................................4
4.2 Business strategy adopt for operating the business internationally.......................................4
CONCLUSION................................................................................................................................5
REFERENCES................................................................................................................................6

INTRODUCTION
International business refer to trading of goods, services, technology, capital and
knowledge across the national borders and at a global or transnational level as it enhance the free
trade, increase the globalization and achieve the world piece by building the relation through
trade. This report explains the international environment of the business and the mechanisms to
regulate the trade. This report explains how the environment and the culture affects the
operations of the business internationally through the communication and .
1.1 Explain international environment of business of Mac Donald's
International business environment is also referred as the global business environment.
McDonald's is the fast food international chain restaurant established globally. It is having
remarkable market share and have the favourable goodwill. It is having the dominant position in
the fast food industry (Dunning, 2015). Several diversified tools and the methods that analyse the
business environment are
Political
policies of the state and the countries always affect the operation of the business.
McDonald's is also affect from these policies as every country is having the different laws and
that influence the business operations of McDonald's. Issues that affects are employee law,
taxation policies etc.
Economic
every company try that they do not affected from the ongoing financial crisis globally. In
the different countries McDonald's also faces the different kinds of revenue measurements as
well as taxes. Not globally but the local condition of the economy also affects the operations of
McDonald's.
Social
Now the living style is being transformed and this will affect the operations of
McDonald's. As the demand of the customers are transformed and also vary from country to
country and their religion also plays the important role. To fulfil the demand of customers
McDonald's also research the market of particular country and try to provide the effective range
of food.
Technological
1

Technological advancement is also impacted the business environment globally. So to sustain in
the market and become competitive the company ensure the adequate as well as influential
technological access to attract the more number of customers from its competitors. McDonald
uses the technological facilities that are equipments for customer retention, modern channels for
distribution, east option for payment, wireless facility for internet etc. and also try to use more
facilities in its store (Dunning, 2015).
Legal
Every business that are operating globally have to follow the legal rules and regulations
of that particular country. McDonald's also have to follow these rules by paying the taxes, stuff
laws, follows healthy and safety rules.
Environmental
McDonald's has faced the criticism in using the non-biodegradable substances for its
glasses. In fact many activist of environment have targeted the business that they are using the
containers for packaging the meals contain polystyrene and it discourages the interest in the
environmental issues.
1.2 Mechanism to regulate the international trade
International trade is being regulated through the treaties that binds the two nations and the WTO
duty review the policies of national trade and ensure the transparency of trade policies through
the global economic policy. As the global power is being shift due to new political arena, now
the importance of international trade is being risen. World Trade organization is performing its
role in the most prominent globally economic organization. They aimed to help the trade to flow
as freely as possible. Five basic principles that guide the WTO role in regulations of trade
(Dzhandzhugazova and et.al., 2015).
Non discrimination : This principle is being inspired by two major policies that is the most
favoured nation rule and the national treatment policy.
Reciprocity : This reflects the desire to limit the scope of free riding to obtain the better access
in foreign markets.
Binding and enforceable commitments : company can only change its commitment after
negotiating it with the trade partners.
2

Transparency : Members of WTO are being require to publish the regulation of trade by the
review of administrative decisions that affects the trade (Eriksson and et.al., 2015).
Safety valves : government has restricted the trade to attain the non-economic objectives in order
to ensure the fair competition.
2.1 Environment and culture of other country affects the operations of business
Culture and environment of another country impact the business that are operating
internationally as these are the things that impact the working of the international business.
Culture and environment are the aspects that impact to each other and it leads to the development
of interesting condition and scenarios (Flower, 2015). Different culture covers at the common
business platform. As different countries in the world is having the different mannerism and
etiquette because the way to see the problem may be different from country to country. Various
factors that impact the operations of business are :
Body Language : every country is having the different culture and it reflects in the behaviour or
in the body language. In international business understanding of undercurrent beneath and the
gesture are very essential. Behaviour of the people many times misinterpreted by others as there
is difference in the culture.
Communication: Every culture is having the different way of communication as some sound
harsh to other some may be the polite. Thus the business is impact by the intercultural
communication and it is one of the major hindrance in the business communication.
3.1 Financial environment affects the global business.
Financial factor affects the business of McDonald's in many ways as it impact influence
of the process and the future actions of business. This is also called as butterfly effect, it is
applied on the global scale such as the fluctuation in the value of American dollar can increase
and decrease the value of Asian currency and this ultimately lead to spend more on imported
auto mobile. Financial factors affect the global market that includes the value of currency of
particular country, value of oil and the emergence of newly nation that are industrialized
(Laursen, 2015).
3

Currency crisis : nation can not sustain financially itself and at the same its currency going to
lose the value of its currency. Currency crisis is being happened when the value of national
currency depreciate fast. Thus, the financial factor impact the business of McDonald's.
Effect of globalization impacts the transactions of business and in this two important benefits is
being identified firs one is globalization as it reduces the cost of capital and in the second
globalization improves the corporate governance so in this the manager actions is being aligned
with the interest of shareholders. This will reduce the firm's cost of capital.
4.1 Reasons to operate business internationally.
In today's world McDonald's is having their establishment in many foreign market and it is
having their own advantages and some of the benefits in the business expansion are :
Diversification : McDonald's is expanding its business to have the diversification in their assets
and the companies operating internationally can offset the negative growth of one outlet can be
offset by other. McDonald's is the company is having their market diversified through global
operation thus it increases its sale in many countries like India, China that will benefit the
company worldwide (Dzhandzhugazova and et.al., 2015).
Foreign investment : McDonald's is having the international expansion always having the
vision for the additional investment opportunities in the foreign market. Companies are able to
develop the new resources and make the important connection by operating in the global market.
4.2 Business strategy adopt for operating the business internationally.
McDonald's is the one of the most successful player in the restaurant chain around all
over the world. They are having the effective management and the global expansion strategies to
enter into new market and gains the share in the foreign fast food market. Generic strategy
identifies its basic approach that develops the business and its competitive advantage.
McDonald's is the biggest fast food chain in all over the world. McDonald's use their intensive
growth strategy in supporting the business development and it expansion. Transactional strategy
is also being used by the company as it is the middle ground in between the multi domestic and
global strategy also they have done the concessions on local taste (Thompson Jr, 2015).
4

Global strategy is having the high integration with low responsiveness. They offer the
standardized products in the whole worldwide also having the goal to maximize the efficiencies
by reducing the cost as much as possible. These companies are highly centralized and their main
role is to implement the decisions of parent company and act as a pipeline of products and
strategies (Eriksson and et.al., 2015).
CONCLUSION
From the above report it is being concluded that this report explains the international
business environment of McDonald's that includes the political, economical, social,
technological, legal and environmental factors. This report elaborate the different mechanism in
regulating the trade are Non discrimination, Reciprocity, Binding and enforceable commitments,
Transparency and Safety valves. This report also contains how the financial environment affect
the operation of business through the currency crisis and it also impacts positively by this factor.
5

REFERENCES
Books and Journals
Dunning, J.H., 2015. The eclectic paradigm of international production: a restatement and some
possible extensions. In The Eclectic Paradigm (pp. 50-84). Palgrave Macmillan, London.
Dzhandzhugazova, E.A and et.al., 2015. Methodological aspects of strategic management of
financial risks during construction of hotel business objects. Asian Social Science, 11(20),
p.229.
Eriksson, K and et.al., 2015. Experiential knowledge and cost in the internationalization process.
In Knowledge, Networks and Power (pp. 41-63). Palgrave Macmillan, London.
Flower, J., 2015. The international integrated reporting council: a story of failure. Critical
Perspectives on Accounting, 27, pp.1-17.
Laursen, K., 2015. Revealed comparative advantage and the alternatives as measures of
international specialization. Eurasian Business Review, 5(1), pp.99-115.
Thompson Jr, S.C., 2015. Business Planning for Mergers and Acquisitions: Corporate,
Securities, Taz, Antitrust, International, and Related Aspects. Carolina Academic Press.
6