Business Strategy: Evaluating McDonald's Expansion in the Bahamas

This report provides a comprehensive analysis of McDonald's potential expansion into the Bahamas. It begins with an introduction to the concept of business expansion and the importance of evaluating various factors before entering a new market. The report uses McDonald's as a case study and evaluates the company's profit potential in the Bahamas through a PESTLE analysis, considering political, economic, social, technological, environmental, and legal factors. It identifies opportunities for market development, automation, and catering to health-conscious consumers. The report also acknowledges the challenges McDonald's might face, such as cultural barriers, local competition, and tax complexities. Finally, the report discusses the merits and pitfalls of the expansion strategy, offering a balanced perspective on the potential for success in the Bahamian market. The report also includes the current merits and pitfalls of the company.

International
Hospitality Operations

Contents
INTRODUCTION...........................................................................................................................3
TASK...............................................................................................................................................3
Evaluation of the profits of the company.....................................................................................3
Opportunity for expanding operations.........................................................................................5
Challenges faced by the company................................................................................................6
Relative merits and pit bulls for the company.............................................................................7
CONCLUSION................................................................................................................................8
REFERNCES...................................................................................................................................9

INTRODUCTION
Expansion is the process in which the company or any organization expands their
operation and activities to other areas also. Expansion brings growth and success for the
organization. Expansion is necessary as it helps in increasing the scope for profits also. Before
expanding any business, organization evaluated many factors which help in see whether the
expansion in particular areas would be beneficial for the company or not. For reference purpose
this report has taken an example of a company, Mcdonalds. It is an American company which
was established in the year 1940. The restaurant was opened by Richard and Maurice
McDonalds. The company is very much famous for selling the different varieties of burgers to
their customers. The company is located at around 38, 695 places serving worldwide. Some of
the products which are served by the company include Hamburgers, Chicken, French fries,
milkshakes, coffee, salads and wraps. Now the company is planning to expand its business
operations and activities into a different region, Bahamas.
This report includes evaluation of the profits for Mc Donalds Company along with the
opportunities for expanding its business activities and operations. The report also includes the
deeper understanding for challenges which are faced by the company. Apart from that the report
also includes the current merits and pitfalls of the company.
TASK
Evaluation of the profits of the company
The areas for profits can get analyzed and evaluated through the proper analyses of pestle
framework. The pestle framework is enabling the organization in evaluating the external factors
which do affects the business activities and task. The pestle analyses are a macro environment
analyses which covers the major environmental part. The pestle analyses for Mc Donald are as
follows:
Political: It includes the rules and regulation which are formed by the government. Some of the
examples which include in this can be corruption, fiscal policies, taxes and the like. As the trade
agreement between and across the countries are increasing very much it has create a big
opportunity for the McD company in expanding its business. It has become very much east for
the organization to do agreements and to operate their business activities in the different
countries. Due to the trade agreement only it has get possible for the Mc Donald to get the rights
for performing their operational activities in Bahamas (Ajmal, Helo and Kassem, 2017). The
political factor also rules the diet and health substance into a nation likewise Bahamas
government is also very much strict to the same. Before they letting any other business into their
nation they make sure that organization gets educated properly about “don’t” factor with relation
to food. Mc Donald before operating into the nation needs to make sure that they do not cook or
make such diet which is not healthy for the people in Bahamas.

Economic: The economic factor includes economic situation and condition of a country. Some
of the example may include GDP of that country, disposable income, employment rates and so
on. As in the case with Bahamas country, it comes into the category for developing nation. It is
believed that the company McD would have a lot of profit prospect there. As the disposable
income for the people is getting increase the chances for increase into the demand and profits for
the company would also get increase. The rapid growth in the developing nation works as an
opportunity for any company. Therefore performing business into the Bahamas consider as a
profitable choice for the company.
Social factor: The social factor includes the factors like taste and preferences of people, their
attitude, behavior, perspective and the so on. As the lives in urban cities or areas are very busy
where people even don’t have much time to cook food for them so they prefer to eat their food at
some restaurants and café. This creates an opportunity for the company as there the sales for
their food would be much. In light of the outside factor of rising expendable wages, McDonald's
has the chance to become dependent on the expanding propensity of buyers to purchase cheap
food as opposed to cooking at home (Harris. and Simpson, 2016). This inclination is likewise
connected to occupied ways of life in urban conditions. These ways of life improve purchasers'
probability of feasting in cafés like McDonald's as opposed to preparing food at home. Then
again, the expanding social assorted variety is seen a danger and an open door with regards to
this PESTEL/PESTLE investigation. For instance, this socio cultural outside factor makes a
differing set of buyer inclinations dependent on different nearby and local markets that
McDonald's must record for in item improvement. Failure to do so can decrease the organization
benefits. The inexpensive food business has the chance to expand its adaptability in item
configuration to fulfill buyers' inclinations in various markets the world over (Britz, 2016).
Technological factor: This factor includes the advancements into technology the region or the
company has. In the world of digitalization where the companies or the organization are
digitalizing their businesses, Mc Donald has also put themselves at the online eating apps where
the customers now can order the food from café. This has given an opportunity to the company
in increasing their scope for sales more. The company also performs various digital marketing
campaigns and advertisements so that they regularly get into the touch with the audiences.
Technological factor has also brought moderate advancements related to R& D which helps the
company in making or producing their production products with speed and with efficiency.
Environmental factor: It includes the factors or the rules and regulations which are related with
the environment and the environmental issues. With the increase into the environmental
awareness the responsibility of the company towards the environment and their activities has
also increased (Gunasekaran and et al., 2018). The strategies which are formed by the
companies are related to the sustainable development and growth of the nation and company. It
has been observed that the customers now a day prefer to purchase only those products or
services which are sustainable and renewable in nature. This has given an opportunity to the
company to become sustainable in their activities.

Legal factor: The legal factor may include the factors related to rules and regulations which are
formed by the legislations. Wellbeing guidelines force limits on the openness and accessibility of
inexpensive food in certain working environments and schools. This lawful pattern compromises
McDonald's incomes from these market portions. Then again, creature government assistance
guidelines are named a danger and an open door in this PESTEL/PESTLE examination. For
instance, these guidelines increment costs in McDonald's gracefully chain. In any case, a similar
outside factor makes a chance to improve the business by executing a complete creature
government assistance strategy, which can draw in more clients who are keen on creature
government assistance. Additionally, McDonald's countenances the danger of higher least wages,
which lead to greater expenses and costs.
Opportunity for expanding operations
The following can be opportunity for the Mc Donald’s company in Bahamas:
Market development: Market development is the strategy in which the company targets the
whole new market with its same products. Through this strategy the company can increase their
market share and growth. this also creates an opportunity for them to increase their margins for
profits as they have a whole new group of customers to add on (Delerue, 2020). Increase in
market share would enable the company in growing its awareness among people about the
products which the company has to deliver and also about the company itself.
Increase the business automation : Through expanding the business operation in the Bahamas
the company can increase their automation activity into the activity. In increase in their
automation activity, the level for production or operation would also get increase as the company
now can produce the products at a large scale and with the least cost. This gives the company an
opportunity to incur the less costs as compared with before.
Healthy lifestyle trends: Now the customers prefer to eat that food which is healthy for their
body. It has been observed that the customers are more serious and conscious regarding their
health, they for that prefer to eat the food which are hygiene and healthy for them. This has given
an opportunity to the company to manufacture the food products which is fresh, hygiene and
healthy to the health of customers.
Increase in cultural diversity : With the increase in mobility of human from one state or
country to another, the cultural and ethics are also getting an exchange. The people now have
become more open towards the other culture and feel very excited to experience these. They also
loves to do experiment into the food dishes and with their food taste (Smith and Barrett, 2019).
The people of Bahamas are very much expecting towards to the new food and drinks that comes
into restaurants and cafes. Therefore this has created an opportunity for the company and gives
more green signal for going for the expansion of their business operations and activities in
Bahamas country.

Increase in disposable income: The disposable income is the income which the people spend to
purchase something. As the level of income increases the disposable income for the people also
gets increase and visa versa. In the country like Bahamas where the disposable income are
increasing, works as an opportunity for the Mc Donald’s company as more people can afford
their food which will increase their level of sales also.
Growth in developing nations: The growth in developing nations has given opportunities to
many companies as a prospect region for their expansion and growth and Bahamas is one of
them (Passas and Blum, 2019). The Bahamas is a developing country which is most famous
for its tourism places. Slowly but steady the country’s growth is increasing which creates a
golden opportunity for the company for their expansion activity.
Increase in international agreements of trade: The increase into the agreements between the
companies or countries has enable in increase the trade activity. The same has happened between
the Mc Donald’s and Bahamas country. They both have come into the agreement to allow the
Mc Donald’s to operate its business activities in Bahamas (Kaikkonen and Laukkala, 2016).
These agreements create an opportunity for the company to sells their products in to the market
of their company. This will increase the market and will make the strong network along with the
market for the company. This will also results into the increase in profits and customers base.
Challenges faced by the company
There are various challenges which the company faced during their process of expansion
and these are as follows:
Cultural barriers: The most common barrier which is faced by the company is the cultural
barriers. Different countries have different cultural habits and values which their people follow.
The company, Mc Donald’s faces various challenges regarding adjusting their activities in
relation to the environment and culture of Bahamas. Understanding a country culture and habit is
very much important as accordingly to that only the company needs to get his people served.
Local competition: There are various local competitors into the region for which the people
prefer more over Mc Donalds. The motive will be to make people understand that how their food
product is different from the other competitors available into the market (Kilovaty, 2016). The
local competitors have the strong market image and value which is very hard to cut. These
competitors create the problem for the company as they can affect the sales at a huge scale.
Tax codes and complications: As Mc Donald’s would be an MNC for Bahamas Country, the
tax rate or percentage for the company would be high as compared with the local competitors.
The complication which involves into the performing the business and its related activities are
much high for the company as they need to obtain the permission and formal concerns from so
many sources so that they can operate their activities into the country. This is also a time
consuming and lengthy process for the company (Kuntonbutr and Kulken, 2017).

Supply chain risks: It is possible that the company do need to export their resources or need to
bring up their resources from other place. The supply chain includes in that would be very long
and complicated for company; it does involves risks in performing the supply for resources in
between. Therefore this creates a big hurdle in the operations for the company about how they
would go to do their supply chain. The set chain for supply should be very effective and
efficient. The effective supply chain also helps the company in attaining the competitive
advantage in its working.
Hiring the employees: When a business get establish into a new region that to operate it they
needs to hire the employees who can operate the activities in there. Hiring the employees at a
new place is a very hard task as one need to find the individuals who has the required skills and
knowledge for which the company is looking for (Sutter, Miyahira, and Fleury, 2017). Therefore
hiring the new employees is yet another challenge for the company to face.
Relative merits and pit bulls for the company
The company has the following merits:
Strong market: The Mc Donald’s has the strong market has the strong market as they are wide
spread into the whole world. The total number of stores the only have is around 38, 695.
Majority of people know the company and its brand and the products for which it is famous for.
As it has a very wide and strong market, the company needs to have to do much marketing and
advertisement for its introduction into the market.
Satisfied customers: The customers are very much happy with the performance of the products
which are served by the company (Hoisington, 2017). The company always tries to provide the
products of nice quality. Not only this the company always try its best to come up with the
innovative and creative food into the market so the interest of the customers get stick to the
company only.
No compromise with quality: The Company also does not compromise with their quality. They
have some standards for their methods of production which they have specified the particular set
for their production activity. They have done so that the product does not get differ from region
to region or branch to branch. All the products should taste the same (Sandler, 2017).
Strong financial position: The Company has the strong financial position. Mc Donald’s has
established its business for over more than 80 years into industry. When the financial soundness
is strong the company can easily expand their business to any region.
The company has the following pit falls :
Incompetent work force: It has been noticed that the employees which are working at store are
not competent enough. This creates the weakness for the company as it can down the image for
them. This also can hamper the image for the company into the market.

Lack of advanced technology: The Company always stays at last when it comes to upgrading
its technology. The company does not put much of its focus upon the technology up gradation.
This also put some disadvantages for the company and for its operations.
RECOMMANDATIONS
The Mc Donald’s for its expansion purpose has to stand upon the legal and environmental
rules and laws so that they does not face the legal issues or problem in between. They need to
work upon their recruitment process so that they can hire competent work force to the store. The
company also needs to work towards the up gradation of their technology as they need to hire the
advance technology into their operations so that they can increase their productivity more.
CONCLUSION
This report discusses about the pestel analyses of the company, Mc Donald’s. There are
various factors for opportunities available to the company some of them are strong base for
customers, changing lifestyles, increasing in trade and so on. There are also various barriers to
expansion for company which may includes cultural barriers, hiring the total new employees,
taxes and complications, and the like. The company’s relative merits and pit falls has also been
discussed into the report.

REFERNCES
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